NEWSFLASH 5 October2011
Government releases draft legislation for FoFA and MySuper Paul Cleary | October 2011 | Insurance & Financial Services
The Government has just released the following draft Bills.
Final tranche of draft FoFA legislation The final tranche of the Future of Financial Advice (FoFA) draft legislation, the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011, was released last week on 28 September 2011. It deals with the bans on: >>
conflicted remuneration through commissions and other volume-based payments - advisers and dealer groups must not accept remuneration which has the potential to influence advice provided to retail clients; employers of advisers or their representatives must not pay conflicted remuneration; product issuers must not provide remuneration to advisers or their representatives, regardless of whether it might influence the financial product advice provided to retail clients. Various exceptions apply;
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conflicted remuneration through soft dollar benefits – advisers must not accept soft dollar benefits over $300 (as currently proposed) which have the potential to influence the advice provided to retail clients; product issuers must not provide soft dollar benefits to advisers or their representatives, regardless of whether it might influence the advice provided to retail clients. Various exceptions apply;
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shelf space fees – advisers and platform operators must not accept volume-based fees for securing shelf space on an adviser’s or platform operator’s approved product list;
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volume rebates - volume rebates paid from platform operators to licensees are prohibited; and
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asset-based fees on geared funds - advisers must not charge a retail client an asset-based fee to the extent that the assets are geared.
Comments on the draft FoFA legislation are due by 19 October 2011. The legislation is expected to commence on 1 July 2012.
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MySuper Core Provisions draft legislation The Government has last week released the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011. The draft establishes the core framework for MySuper products and includes: >>
the definition and characteristics of a MySuper product;
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requirements that limit a fund to offering only one MySuper product (exceptions apply);
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the application and authorisation processes for MySuper;
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changes to SG requirements;
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rules for account transfers for MySuper products; and
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the fees that can be charged to members of a MySuper product and how.
An Explanatory Memorandum accompanying the draft legislation (EM) sets out how the changes apply to trustees, members, employers and industry generally. The EM and the draft legislation are available on the Stronger Super website. Further MySuper provisions will be addressed in later tranches of legislation. Comments on the draft MySuper Core Provisions legislation are due by 13 October 2011. The legislation is scheduled to amend the SIS Act from 1 January 2013 and the SG Act from 1 October 2013.
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