✦ Plain-English Summary

Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020

What it does

This bill tightens rules around how financial advisers and superannuation funds charge you fees, particularly "ongoing fees" that keep coming out of your account automatically. It removes old loopholes that let advisers keep charging without properly checking in with you, and adds stricter disclosure rules so you know exactly who's advising you and what they're earning.

Why it matters

After the Hayne Royal Commission exposed dodgy practices in the finance sector, many Australians discovered they were being charged for advice they weren't getting or didn't need. These changes make it harder for advisers to quietly keep taking money from your account without your active permission and proper disclosure.

Key details

• Ongoing fees must stop automatically if advisers don't comply with new disclosure and communication requirements — they can't just keep charging indefinitely
• Superannuation fees get stricter rules, especially for MySuper products (the default super option), so you'll know what you're being charged and why
• Comes into force on 1 July 2021, giving the financial sector time to update their systems and processes

Official Description

Amends the: Corporations Act 2001 to: require financial services providers that receive fees under an ongoing fee arrangement to: provide clients with a document each year which outlines the fees they will be charged and the services they will be entitled to in the following 12 months and which seeks annual renewal for all ongoing fee arrangements; and obtain written consent before fees under an ongoing fee arrangement can be deducted from a client’s account; require a financial services licensee or authorised representative to give a written disclosure of lack of independence where they are authorised to provide personal advice to a retail client; and make consequential amendments; and Superannuation Industry (Supervision) Act 1993 to: provide that a superannuation trustee can only charge advice fees to a member where certain conditions are satisfied; and remove a superannuation trustee’s ability to charge fees under an ongoing fee arrangement for financial product advice from MySuper products.

Committee Referrals

Senate Standing Committee for the Scrutiny of Bills

No formal division recorded

This bill passed by voice vote — parliament agreed without calling a formal count. A division is only recorded when a member explicitly requests one.

No votes yet.

No votes were recorded for this bill.