In July, The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill received Royal Assent. This might not mean much to you, but the new Act (No. 67, 2024) delivers changes designed to reduce red tape, enhance transparency, and improve financial outcomes for consumers. 

The new Act’s provisions are designed to enhance operational efficiency, reduce administrative burdens, and improve consumer outcomes. By understanding these changes, financial advisers can better navigate the regulatory landscape and maintain compliance.

It’s great to celebrate regulatory reform but don’t forget past regulatory reforms. “Just because you’re clean don’t mean you don’t miss it”. While you work to operationalise these changes, please appreciate that transitioning into the new regime will not be without its challenges. 

This article will break down the key provisions, commencement dates, draft regulations and the implications of these changes on consumers, financial advisers and AFS Licensees. Of course, general observations are a poor substitute for tailored advice.

To stay ahead of these regulatory changes and ensure compliance, reach out to Assured Support. Our team of experts is here to help you navigate the complexities of the Treasury Laws Amendment Act 2024 and enhance your business. 

Commencement Dates and Key Provisions

Understanding when the various provisions of the Act come into effect is crucial for compliance. Below is a detailed breakdown of the commencement dates and the key changes:

Schedule 1: Delivering Better Financial Outcomes – Reducing Red Tape

Part 1: Superannuation

• Commencement Date: 10 January 2025
• Advice costs. A Trustee must not charge a member for financial product advice unless it relates to personal advice for which the Trustee has received the member’s written consent. The content of the consent is prescribed. Transitional arrangements apply to current non-ongoing fee arrangements. 
• Proposed amendments to the Electronic Transactions Regulations 2020 to ensure that written information or documentation requirements can continue to be given electronically.

Part 2: Ongoing Fee Arrangements

• Commencement Date: 10 January 2025 (with transitional provisions)
• Corporations Act 2001: Changes aim to improve transparency and regulation of ongoing fee arrangements by establishing a consolidated and streamlined consent process. Notably, the requirement to issue fee disclosure statements has been eliminated, reducing administrative burdens for advisers. Understand the limits of this amendment, it simply combines the FDS and Fee Consent into a single document. That said, removing fee disclosure statements is like decluttering your workspace— it won’t transform your business but less paperwork should mean more focus on what truly matters.

• Transitional arrangements apply to existing OFAs so that current requirements may apply for up to 150 days after the ‘transition day’, which is the anniversary of the day the OFA was entered into that occurs after 10 January 2025.

Part 3: Financial Services Guides

• Commencement Date: 10 July 2024
• Corporations Act 2001: Amendments require financial services guides to be more consumer-friendly, ensuring better financial outcomes for consumers by providing clear and accessible information.
• These amendments mean a financial services licensee (AFS licensee) or its authorised representative that provides financial product advice (whether general advice or personal advice) can continue to give clients an FSG or, alternatively, can make information that would be required to be in that FSG available on their website as ‘website disclosure information’

Part 4: Conflicted Remuneration

• Commencement Date: 10 July 2024
• Corporations Act 2001: These provisions address conflicted remuneration structures in financial advice, aiming to eliminate biases and enhance transparency. In simple terms, the new definition provides that monetary and non-monetary benefits will not be conflicted remuneration if they are given by a retail client for financial services provided by the Licensee or Representative.

Part 5: Insurance Commissions

• Commencement Date: 9 July 2025
• Corporations Act 2001: Regulation changes target the commissions received from insurance products, requiring advisers who provide personal insurance advice to obtain their retail client’s informed consent before the adviser can accept or receive commission payments. To put it another way, insurance commissions will be considered conflicted remuneration unless the client provides prior consent for the payments to be given. It’s also important to note that consent is irrevocable and contingent on the prior disclosure of the benefits and services provided. 

Ongoing Fee Arrangements: Key Changes 

Overview 

The recent amendments may significantly streamline the process for ongoing fee arrangements. Here’s what financial advisers need to know about the changes, when they take effect, and how to adapt.

Key Changes

• Streamlined Consent Process: The Act establishes a consolidated and simplified consent process for clients entering or renewing ongoing fee arrangements. Advisers will no longer need to provide a fee disclosure statement as part of these arrangements. But, to be clear, the content of the consent includes matters previously contained in the FDS. 
• Removal of Redundant Obligations: The requirement to issue fee disclosure statements has been eliminated. This change aims to reduce administrative burdens and enhance operational efficiency.
• Updates to Compliance Records: While the obligation to keep records related to fee disclosure statements has been repealed, advisers must retain records showing client consent for ongoing fee arrangements. This is crucial for compliance with the amended Act.
• Changes to Civil Penalties: Certain civil penalty provisions that previously required notification to ASIC have been updated. Advisers should familiarise themselves with these changes to avoid potential penalties.
• Transitional Arrangements: Transitional provisions are in place to ensure advisers can adjust to these changes smoothly. Advisers must be aware that records created under the old requirements must still be retained to demonstrate compliance.

Implementation Timeline

• Transitional Arrangements: Fee Disclosure obligations are removed from 9 January 2025, and where renewal falls after 9 January 2025, new arrangements will need to be in place before the anniversary date. New clients (pre-January) are still subject to the current regime. 

Practical steps for regulatory compliance

• Update Internal Processes: Revise your compliance and record-keeping processes to align with the new consent requirements.
• Educate Your Team: Ensure all team members understand the changes and the importance of documenting client consent effectively.
• Review Client Agreements: Assess current agreements to ensure they comply with the new regulations.

These may not be the significant reforms that advisers and licensees hoped for, but they may profoundly reduce the costs and complexity of providing ongoing service. Don’t ignore the opportunities these tweaks present AFS Licensees and financial advisers should be able to enhance service delivery while reducing costs and eliminating bureaucracy.

Conclusion

The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 includes significant changes across superannuation, taxation and financial services. Key provisions, especially those related to ongoing fee arrangements within superannuation, will commence on 9 January 2025, providing a six-month lead time for compliance. 

Now is the time to consider their impact. Transitioning to the new regulations like digitising paper files—will be challenging initially, and while it won’t be transformative, it will ultimately enhance your efficiency and reduce both your costs and risks.

For further details and specific legislative text, please refer to the official document or the Parliament of Australia’s website. 

If you need expert assistance to navigate these regulatory changes and enhance your business, contact Assured Support today. Our team is here to help you stay compliant and thrive in the new regulatory environment.