The Australian Securities & Investments Commission (ASIC) has announced deferral of the commencement date of the mortgage broker best interest duty and remuneration reforms and the design and distribution obligations for six months from their original commencement dates.
These mortgage broker reforms will commence on 1 January 2021 and the design and distribution obligations have been deferred until 5 October 2021. ASIC advised that it had deferred the commencement dates so industry participants can ‘focus on immediate priorities and the needs of their customers at this difficult time’.
The announcement comes on the heels of significant industry engagement seeking to delay implementation due to challenges presented by the pandemic but also due to the issues presented to the industry relating to the lack of final regulations and regulatory guidance together with currently impaired capacity to ensure that appropriate training, compliance, documentation, systems and procedures are in place for brokers to meet the new obligations.
ASIC advises that it will continue to work towards releasing final guidance on both reforms in mid-2020 responding to industry requests for that guidance to be finalised as soon as possible.
Also, the government has announced a delay to the implementation of commitments associated with recommendations made by the Hayne Royal Commission due to the ‘significant impacts’ of the current pandemic. Measures that were originally scheduled to be introduced to the Parliament by 30 June 2020 will now be introduced in December 2020 and those similarly scheduled for introduction in December 2020 will now be introduced by June 2021.
The Treasurer announced that in relation to commencement dates contained in Royal Commission-related exposure draft legislation issued prior to the coronavirus pandemic, the Government will also extend these dates by an additional six months.
“This announcement today balances the need to implement the recommendations of the Royal Commission with the need to ensure our financial institutions are in a position to devote their resources to responding to the significant challenges posed by the coronavirus,” the Treasurer added.
The legislation driven from the Royal Commission recommendations may include:
Legislation (originally) to be consulted on and introduced by 30 June 2020 – now December 2020
Measures to improve consumer protections
- Recommendation 1.15 Enforceable code provisions for industry codes of conduct
Measures to strengthen financial regulators
- Recommendation 1.6 Reference checking and information sharing for mortgage brokers (linked to):
- Recommendation 2.7 Reference checking and information sharing for financial advisers
- Recommendation 2.8 Licensee obligations to report compliance concerns
- Recommendation 2.9 Licensee obligations where misconduct by financial advisers
- Recommendation 7.2 – Implementing the ASIC Enforcement Review Taskforce’s recommendations to improve the breach reporting regime (and its directions power)
