www.pwc.com.au PwC Regulatory Update December 2013 & January 2014 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to? 1. Legislative/Government developments Future of financial advice (FOFA) amendments Delivering affordable and accessible financial advice released for public consultation The Assistant Treasurer, Hon Arthur Sinodinos, has announced reforms to The Government has released for public consultation draft regulations and the Future of Financial Advice (FOFA) legislation. Key elements of the legislation to enact its announced reforms to FOFA. Government's amendments include: Key amendments include: • Removing the 'opt-in' requirement • Removing the opt-in requirement • Streamlining requirements of the annual fee disclosure • Streamlining the annual fee disclosure requirements • Removing 'catch-all' from the best interests duty • Amending the best interests duty to allow for scaled advice • Allow the provision of scaled advice • Exempting general advice from conflicted remuneration • Exempting general advice from conflicted remuneration • Amending grandfathering to allow for adviser movements. • Advisor’s continue access to grandfathered benefits Consultation Documents include: See media release • Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 (bill) Review of Anti-Money Laundering Laws Announced • Explanatory Memorandum (EM) The Minister for Justice, Michael Keenan has announced a review of • Corporations Amendment (Streamlining of Future of Financial Advice) Australia’s anti-money laundering and counter-terrorism financing Regulation 2014 (regulation) (AML/CTF) laws. Mr Keenan said that review of Australia’s AML/CTF laws is required by section 251 of the AML/CTF Act. It provides an opportunity to • Explanatory Statement (ES) consult businesses and identify possible enhancements and simplifications to make these laws more effective. The consultation close on 19 February 2014. The Attorney-General’s Department is responsible for the review. It has See media release issued a paper that identifies a range of issues to assist interested parties in preparing submissions. Submissions close on 28 February 2014. See media release PwC 2 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to? 1. Legislative/Government developments (cont’d) Australian Government Protocols governing the Financial systems inquiry – Call for initial engagement between commonwealth bodies and the submissions Parliamentary Budget Officer The Financial System Inquiry is calling for initial submissions on the issues The Parliament of Australia has established the Parliamentary Budget Office set out in its terms of reference. (PBO), headed by the Parliamentary Budget Officer (the Officer), to provide Senators and Members of the House of Representatives with independent An important role of the Inquiry is to assess the current state of the and non-partisan analysis of the budget cycle, fiscal policy and the financial Australian financial system and the extent to which the system meets the implications of policy proposals. needs of users of the system. Respondents are invited to comment on the strengths of the system as well as identifying potential gaps and deficiencies. The PBO also prepare submissions to inquiries of Parliamentary Committees on request, conduct research on and analysis of the budget and The deadline for initial submissions is 31 March 2014. fiscal policy settings and prepare a post-election report to include costings of See media release the election commitments of Parliamentary parties after a general election. See Treasury website Delivering a more efficient government - Superannuation Priorities for Australia's presidency of the G20 in 2014 and the role of the Global Financial Safety Net The Assistant Treasurer, Senator the Hon Arthur Sinodinos AO, today announced that he was streamlining the consultation arrangements for Barry Sterland , Australian G20 Finance Deputy has spoken about the superannuation as part of the Government's efficiency reforms. Australia’s G20 priorities and role of the Global Financial Safety Net. This includes the cessation of three non-statutory bodies that are no longer The G20 will be dealing with an uncertain and challenging environment required: the SuperStream Advisory Council, Superannuation Advisory over the coming year. There are some welcome positive signs for growth, Committee and the Superannuation Roundtable. With reforms to the particularly in the US and Japan and the stabilisation of growth in China. superannuation sector in recent years largely implemented, the work of However, it is clear that world economic growth is weak and continues to these bodies has also been completed. Remaining issues are being taken up disappoint, particularly the presence of high output gaps and spare capacity. by forums chaired by the Australian Taxation Office. See full speech See media release PwC 3 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to? 1. Legislative/Government developments (cont’d) 2014 Benchmarking highlights Australia’s strengths as an investment destination The 2014 Austrade Benchmark Report, which presents Australia's attractiveness as a business and investment destination, was launched by Australian Minister for Trade and Investment, Mr Andrew Robb today. Using key economic, financial and demographic data, the report will assist potential foreign investors to evaluate Australia's economic credentials against similar economies and to understand the investment opportunities Australia presents. "Strong economic fundamentals combined with our proximity and experience in working with high growth Asian nations, make Australia an excellent place to do business," Mr Robb said. See Austrade PwC 4 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to? 2. What have the regulators been up to? ASIC helps develop IOSCO report on the regulation of retail structured ASIC products Australian Securities and Investments Commission ASIC has assisted the International Organization of Securities Commissions (IOSCO) to publish a report on Regulation of Retail Structured Products. The report provides a toolkit outlining regulatory options that APRA security regulators globally may find useful to regulate retail structured products. The toolkit has been developed with the goal of enhancing investor protection by providing securities Australian Prudential and Regulatory regulators with possible approaches to address certain concerns with retail structured products. Authority See media release ASX Australian Securities Exchange ASIC issues further super reforms guidance ASIC has issued guidance to assist industry with superannuation reforms, as well as a consultation paper on Keeping Superannuation Websites up to Date. The paper relates to the new product dashboard RBA requirements for MySuper products, and the new fees and costs disclosure requirements for product Reserve Bank of Australia disclosure statements (PDSs) as well as periodic statements. Information Sheet 170 MySuper product dashboard requirements for superannuation trustees (INFO AUSTRAC 170) explains what information must be provided for each of the following measures: Australian Transaction Reports and • The return target Analysis Centre • The returns for previous financial years • A comparison between the return target and returns for previous financial years • The level of investment risk • A statement of fees and other costs. See media release PwC 5 Legislative/ What have Overseas PwC Government the regulators Industry bodies developments publications developments been up to? 2. What have the regulators been up to? (cont’d) ASIC ASIC provides relief from new super disclosure requirements Australian Securities and Investments ASIC has issued a class order [CO 13/1534] and taken a no-action position to assist the industry with the Commission introduction of recent superannuation reforms. This is aimed to facilitate compliance and ensures trustees have adequate time to comply with the reform timetable. APRA ASIC has: Australian Prudential and Regulatory • Changed the start date for compliance with new fees and costs disclosure arrangements by class order Authority from 31 December 2013 to 1 July 2014 • Provided conditional interim relief by class order so that RSE licensees do not have to provide a hard ASX copy of the product dashboard with the periodic statement Australian Securities Exchange • Provided a no-action position for RSE licensees so that information about accrued default amounts does not need to be included in an exit statement. See media release RBA Reserve Bank of Australia ASIC Update on FOFA AUSTRAC The Assistant Treasurer, Senator the Hon. Arthur Sinodinos announced proposed amendments to the Future of Financial Advice (FOFA) legislation. Consistent with ASIC's stance during the introduction of Australian Transaction Reports and other major policy reforms, a facilitative approach will be taken to the FOFA reforms until mid-2014. Analysis Centre In light of this approach, ASIC will not take enforcement action in relation to the specific FOFA provisions that the Government is planning to repeal. For example, ASIC will not take action for breaches of current section 962S of the Corporations Act 2001,