Treasury has released for consultation its draft legislation for stronger oversight of the financial advice sector, including the establishment of a single disciplinary body as recommended by the Hayne royal commission.

The exposure draft sets out new penalties and sanctions that will apply to advisers found to have breached their obligations and introduces a new annual registration system.

It also implements the Federal Government’s response to recommendation 7.1 of the Independent Review of the Tax Practitioners Board by introducing a single registration and disciplinary system for financial advisers who provide tax or financial advice services.

“The draft legislation will strengthen oversight of financial advisers while simplifying the regulatory framework governing the provision of financial advice, helping to reduce complexity and cost for advisers,” a press statement from the office of Financial Services Minister Jane Hume says.

“This is part of the Government’s ongoing commitment to ensure Australians have access to affordable and high quality advice.”

As part of the planned changes, the single disciplinary body is to be set up by expanding the operation of the Financial Services and Credit Panel (FSCP). The FSCP currently sits inside the Australian Securities and Investments Commission (ASIC), assisting the corporate regulator on bespoke banning matters.

A question and answer guide from Treasury says where ASIC reasonably believes that a financial adviser has breached obligations under the Corporations Act 2001 but a banning order is not appropriate, the regulator must then convene an FSCP to consider the matter.

FSCP can impose a range of administrative sanctions, an infringement notice or recommend that ASIC commences court proceedings seeking a civil penalty.

The administrative sanctions that the FSCP can apply are a warning or reprimand, directions to the adviser to undertake additional training or supervision, or suspending or cancelling the adviser’s registration for a specified period.

The disciplinary body will be established on January 1 next year, subject to the passage of legislation.

Under the draft bill, a licensee can begin registering their existing financial advisers from January 1 next year and has until January 1 2023 to register them so that they can continue to provide advice.

From January 1 2023, new advisers cannot begin to provide financial advice until ASIC has confirmed that the adviser has been registered.

The closing date for submissions is May 14.

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