Financial Sector Reform Amendment (Hayne Royal Commission Response - Better Advice) Regulations 2021

(F2021L01854)

20 December 2021

Australian Securities and Investments Commission Act 2001; Corporations Act 2001; Tax Agent Services Act 2009.

1   Name

This instrument is the Financial Sector Reform Amendment (Hayne Royal Commission Response - Better Advice) Regulations 2021.

2   Commencement

 

(1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.

      

(2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3   Authority

This instrument is made under the following:

(a) the Australian Securities and Investments Commission Act 2001;

(b) the Corporations Act 2001;

(c) the Tax Agent Services Act 2009.

4   Schedules

Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1   Amendments

Australian Securities and Investments Commission Regulations 2001

1   After Part 2A

Insert:

Part 2B - Financial Services and Credit Panels

12N Circumstances in which ASIC must convene a Financial Services and Credit Panel

(1) For the purposes of subsection 139(2) of the Act, ASIC must convene a Financial Services and Credit Panel to perform functions or exercise powers under the corporations legislation in relation to a relevant provider if:

(a) a circumstance specified in subregulation (2) applies in relation to the relevant provider; and

(b) ASIC has not exercised, and does not propose to exercise, any of its powers under the corporations legislation against the relevant provider in relation to the circumstance.

(2) The following circumstances are specified for the purposes of paragraph (1)(a):

(a) the relevant provider becomes an insolvent under administration and ASIC is aware of the insolvency;

(b) the relevant provider is convicted of fraud and ASIC is aware of the conviction;

(c) ASIC reasonably believes that the relevant provider is not a fit and proper person to provide personal advice to retail clients in relation to relevant financial products (all within the meaning of Chapter 7 of the Corporations Act), having regard to:

(i) the matters specified in paragraphs 921U(a) to (k) of the Corporations Act (subject to Part VIIC of the Crimes Act 1914); and

(ii) any other matter ASIC considers relevant;

(d) ASIC reasonably believes that the relevant provider has contravened:

(i) subsection 921BA(1), (2) or (3) of the Corporations Act (relevant providers to meet education and training standards); or

(ii) subsection 921F(4) of the Corporations Act (about the provision of a Statement of Advice by a provisional relevant provider to a retail client); or

(iii) section 921Y of the Corporations Act (unregistered relevant providers not to provide personal advice);

(e) ASIC reasonably believes that:

(i) the relevant provider has contravened a financial services law (including a restricted civil penalty provision); and

(ii) the contravention is serious;

(f) both of the following apply:

(i) the relevant provider has been involved in the contravention of a financial services law (including a restricted civil penalty provision) by another person;

(ii) ASIC reasonably believes that the contravention is serious;

(g) subregulation (3) applies to the relevant provider.

Note: Subsection 921E(3) of the Corporations Act (relevant providers to comply with the Code of Ethics) is a financial services law.

(3) This subregulation applies to the relevant provider if:

(a) the relevant provider has, at least twice, been linked to a refusal or failure to give effect to a determination made by AFCA relating to a complaint that relates to:

(i) a financial services business; or

(ii) credit activities (within the meaning of the National Consumer Credit Protection Act 2009); and

(b) ASIC reasonably believes that the refusal or failure:

(i) has resulted, or is likely to result, in material loss or damage to a client of the relevant provider; or

(ii) has resulted, or is likely to result, in a material benefit to the relevant provider; or

(iii) involves dishonesty or fraud.

Note: To work out whether a relevant provider has been linked as described in paragraph (a), see section 910C of the Corporations Act.

(4) A contravention is serious for the purposes of subparagraph (2)(e)(ii) or (f)(ii) if it:

(a) has resulted, or is likely to result, in material loss or damage to a client of the relevant provider; or

(b) has resulted, or is likely to result, in a material benefit to the relevant provider; or

(c) involves dishonesty or fraud.

12P Allowances and expenses payable for attendance at hearings of a Financial Services and Credit Panel

For the purposes of section 166 of the Act, a person who appears at a hearing of a Financial Services and Credit Panel in accordance with a summons issued under subsection 165(1) of the Act is entitled to be paid allowances and expenses in accordance with Schedule 2.

2   Schedule 2 (note to Schedule heading)

Omit "12 and 43", substitute "12, 12P and 43".

3   Items 1, 2 and 3 of Schedule 2

Omit "Panel or the Board", substitute "Panel, the Board or a Financial Services and Credit Panel".

Corporations Regulations 2001

4   After subparagraph 7.6.02A(2)(a)(ii)

Insert:

(iia) subsection 921BA(5) in so far as it relates to subsection 921BA(4);

(iib) subsection 921BB(4);

(iic) subsection 921E(3);

5   After regulation 7.6.06C

Insert:

7.6.06D Register of Relevant Providers - prescribed instruments

(1) For the purposes of subsection 922Q(3) of the Act, the following kinds of instrument made under subsection 921K(1) of the Act are prescribed:

(a) a direction (other than a direction covered by subregulation (2)) that a relevant provider:

(i) undertake specified training; or

(ii) receive specified counselling; or

(iii) receive specified supervision; or

(iv) report specified matters to ASIC;

(b) a registration suspension order;

(c) a registration prohibition order.

(2) A direction is covered by this subregulation if:

(a) on a particular occasion, one or more instruments are made under subsection 921K(1) of the Act in relation to a relevant provider; and

(b) the direction is that instrument or one of those instruments; and

(c) that occasion is the first occasion on which an instrument is made under that subsection in relation to the relevant provider.

6   At the end of Part 7.6

Add:

7.6.07B Exam for existing providers

(1) For the purposes of paragraph 1684B(a) of the Act, 1 October 2022 is prescribed in relation to an existing provider who is a relevant provider if, at least twice before 1 January 2022, the existing provider sat an exam approved for the purposes of subsection 921B(3) of the Act as in force immediately before 1 January 2022.

(2) In this regulation:

existing provider has the meaning given by section 1546A of the Act.

7   After paragraph 9.5.01(a)

Insert:

(b) subsection 921G(2) (Approving or refusing to approve foreign qualifications);

(ba) subsection 921G(4) (Specifying courses);

Tax Agent Services Regulations 2009

8   Regulation 3 (definition of recognised tax agent association)

Repeal the definition, substitute:

recognised tax agent association means:

(a) an organisation recognised by the Board under regulation 5B; or

(b) an organisation that, immediately before 1 January 2022, was a recognised tax (financial) adviser association within the meaning of this instrument as in force at that time.

9   Regulation 3 (definition of recognised tax (financial) adviser association)

Repeal the definition.

10   Regulation 3(paragraph (b) of the definition of requirements for recognition)

Omit "Schedule 1; or", substitute "Schedule 1.".

11   Regulation 3 (paragraph (c) of the definition of requirements for recognition)

Repeal the paragraph.

12   Regulation 4

Omit "registered tax agents, BAS agents and tax (financial) advisers", substitute "registered tax agents and BAS agents".

13   Subregulation 5D(1)

Repeal the subregulation, substitute:

(1) This regulation applies if the Board gives a recognised tax agent association a written request that the association tell the Board the reasons why it is still appropriate for the association to be a recognised tax agent association.

14   Division 2A of Part 1A

Repeal the Division.

15   Regulation 6

Repeal the regulation, substitute:

6 Publication of certain information on Board's website

The Board must publish the following on its website:

(a) notice of the following decisions:

(i) a decision by the Board to recognise an organisation as a recognised BAS agent association under regulation 4D;

(ii) a decision by the Board to terminate the recognition of a recognised BAS agent association under regulation 4G;

(iii) a decision by the Board to recognise an organisation as a recognised tax agent association under regulation 5B;

(iv) a decision by the Board to terminate the recognition of a recognised tax agent association under regulation 5E;

(b) if, immediately before 1 January 2022, an organisation was a recognised tax (financial) adviser association (within the meaning of this instrument as in force at that time) - notice that, on that day, the organisation became a recognised tax agent association because of paragraph (b) of the definition of recognised tax agent association .

16   Paragraph 6A(d)

Omit "regulation 5E;", substitute "regulation 5E.".

17   Paragraphs 6A(e) and (f)

Repeal the paragraphs.

18   Regulation 6B

Omit "recognised BAS agent association, recognised tax agent association or recognised tax (financial) adviser association", substitute "recognised BAS agent association or recognised tax agent association".

19   Regulation 8A

Repeal the regulation.

20   Subregulation 9(1)

Repeal the subregulation, substitute:

(1) For the purposes of paragraph 20-20(2)(b) of the Act, the fee for an application of a kind referred to in column 1 of an item of the following table is the fee set out in column 2 of that item.

21   Regulation 12 (heading)

Omit " tax agents, BAS agents and tax (financial) advisers ", substitute " tax agents and BAS agents ".

22   Subregulation 12(1)

Omit "registered tax agents, BAS agents and tax (financial) advisers", substitute "registered tax agents and BAS agents".

23   Subregulation 12(1)

Omit "for each registered tax agent, BAS agent and tax (financial) adviser", substitute "for each registered tax agent and BAS agent".

24   Paragraphs 12(1)(a) to (f)

Omit "registered tax agent, BAS agent or tax (financial) adviser", substitute "registered tax agent or BAS agent".

25   Subregulation 12(1) (note)

Omit "registered tax agent, BAS agent or tax (financial) adviser", substitute "registered tax agent or BAS agent".

26   Subregulation 12(2)

Omit "registered tax agents, BAS agents and tax (financial) advisers", substitute "registered tax agents and BAS agents".

27   Subregulation 12(2)

Omit "registered tax agent, BAS agent or tax (financial) adviser", substitute "registered tax agent or BAS agent".

28   Subregulation 12(3)

Omit "registered tax agents, BAS agents or tax (financial) advisers", substitute "registered tax agents or BAS agents".

29   Subregulation 12(4)

Omit "tax agents, BAS agents and tax (financial) advisers" (wherever occurring), substitute "tax agents and BAS agents".

30   At the end of subregulation 13(1)

Add:

; (m) subject to subregulation (2), a tax (financial) advice service provided between 1 January and 31 December 2022 by an entity that:

(i) immediately before 1 January 2022, was a registered tax (financial) adviser (within the meaning of the Act as in force at that time); and

(ii) is not a relevant provider.

31   After subregulation 13(1)

Insert:

(2) Paragraph (1)(m) does not cover a service provided by an entity if:

(a) on or after 1 January 2022, the entity applies, under section 20-20 of the Act, for registration as a tax agent; and

(b) the service is provided:

(i) if the Board grants the application - after the registration commences; or

(ii) if the Board rejects the application - after the Board notifies the entity of its decision.

32   Schedule 1 (note to Schedule heading)

Omit "regulations 4D, 5B and 5H", substitute "regulations 4D and 5B".

33   Paragraphs 210(a) and (b) of Schedule 1

Omit "the discipline of accountancy", substitute "a relevant discipline (within the meaning of Part 2 of Schedule 2)".

34   At the end of item 210 of Schedule 1

Add:

; (f) the member has the equivalent of 6 years of full-time experience in providing tax (financial) advice services in the past 8 years.

35   Part 3 of Schedule 1

Repeal the Part.

36   Schedule 2 (heading)

Omit " BAS agent, tax agent or tax (financial) adviser ", substitute " BAS agent or tax agent ".

37   Schedule 2 (note to Schedule heading)

Omit "regulations 7, 8 and 8A", substitute "regulations 7 and 8".

38   At the end of Division 1 of Part 2 of Schedule 2

Add:

Tertiary qualifications - tax (financial) advice services

207 A requirement is that:

(a) the individual has been awarded:

(i) a degree or a post-graduate award from an Australian tertiary institution in a relevant discipline; or

(ii) a degree or award that is approved by the Board from an equivalent institution in a relevant discipline; and

(b) the individual has successfully completed a course in commercial law that is approved by the Board; and

(c) the individual has successfully completed a course in Australian taxation law that is approved by the Board; and

(d) the individual has been engaged in the equivalent of 12 months of full-time relevant tax (financial) advice experience in the preceding 5 years; and

(e) the individual is, or was within the preceding 90 days:

(i) a financial services licensee within the meaning of Chapter 7 of the Corporations Act 2001; or

(ii) a representative of a financial services licensee mentioned in paragraph (a) of the definition of representative in section 910A of the Corporations Act 2001.

Note 1: The Board may approve a course by an approval process, an accreditation scheme, or by other means.

Note 2: If the Board grants an application for registration, the Board may impose one or more conditions to which the registration is subject (see subsections 20-25(5) to (7) of the Act).

Diploma or higher award - tax (financial) advice services

208 A requirement is that:

(a) the individual has been awarded a diploma or higher award from:

(i) a registered training organisation; or

(ii) an equivalent institution;

in a relevant discipline; and

(b) the individual has successfully completed a course in commercial law that is approved by the Board; and

(c) the individual has successfully completed a course in Australian taxation law that is approved by the Board; and

(d) the individual has been engaged in the equivalent of 18 months of full-time relevant tax (financial) advice experience in the preceding 5 years; and

(e) the individual is, or was within the preceding 90 days:

(i) a financial services licensee within the meaning of Chapter 7 of the Corporations Act 2001; or

(ii) a representative of a financial services licensee mentioned in paragraph (a) of the definition of representative in section 910A of the Corporations Act 2001.

Note 1: The Board may approve a course by an approval process, an accreditation scheme, or by other means.

Note 2: If the Board grants an application for registration, the Board may impose one or more conditions to which the registration is subject (see subsections 20-25(5) to (7) of the Act).

Work experience - tax (financial) advice services

209 A requirement is that:

(a) the individual has successfully completed a course in commercial law that is approved by the Board; and

(b) the individual has successfully completed a course in Australian taxation law that is approved by the Board; and

(c) the individual has been engaged in the equivalent of 3 years of full-time relevant tax (financial) advice experience in the preceding 5 years; and

(d) the individual is, or was within the preceding 90 days:

(i) a financial services licensee within the meaning of Chapter 7 of the Corporations Act 2001; or

(ii) a representative of a financial services licensee mentioned in paragraph (a) of the definition of representative in section 910A of the Corporations Act 2001.

Note 1: The Board may approve a course by an approval process, an accreditation scheme, or by other means.

Note 2: If the Board grants an application for registration, the Board may impose one or more conditions to which the registration is subject (see subsections 20-25(5) to (7) of the Act).

Membership of professional association - tax (financial) advice services

210 A requirement is that:

(a) the individual is a voting member of a recognised tax agent association; and

(b) the individual has been engaged in the equivalent of 6 years of full-time relevant tax (financial) advice experience in the preceding 8 years; and

(c) the individual is, or was within the preceding 90 days:

(i) a financial services licensee within the meaning of Chapter 7 of the Corporations Act 2001; or

(ii) a representative of a financial services licensee mentioned in paragraph (a) of the definition of representative in section 910A of the Corporations Act 2001.

Note: If the Board grants an application for registration, the Board may impose one or more conditions to which the registration is subject (see subsections 20-25(5) to (7) of the Act).

Registered tax (financial) advisers

211 A requirement is that:

(a) immediately before 1 January 2022, the individual was a registered tax (financial) adviser within the meaning of the Act as in force at that time; and

(b) the individual's application for registration, under section 20-20 of the Act, is made before 1 January 2023.

Note: If the Board grants an application for registration, the Board may impose one or more conditions to which the registration is subject (see subsections 20-25(5) to (7) of the Act).

39   Division 2 of Part 2 of Schedule 2

Repeal the Division, substitute:

Division 2 - Definitions

212 In Division 1:

relevant discipline includes a discipline related to finance, financial planning, commerce, economics, business, tax, accountancy, or law.

relevant experience means work by an individual:

(a) as a tax agent registered under the Act; or

(b) as a tax agent registered under Part VIIA of the Income Tax Assessment Act 1936 as in force immediately before 1 March 2010; or

(c) under the supervision and control of a tax agent registered under the Act; or

(d) under the supervision and control of a tax agent registered under Part VIIA of the Income Tax Assessment Act 1936 as in force immediately before 1 March 2010; or

(e) as an Australian legal practitioner; or

(f) of another kind approved by the Board;

in the course of which the individual's work has included substantial involvement in one or more of the types of tax agent services described in section 90-5 of the Act, or substantial involvement in a particular area of taxation law to which one or more of those types of tax agent services relate.

relevant tax (financial) advice experience means work by an individual:

(a) as a registered tax (financial) adviser within the meaning of the Act as in force immediately before 1 January 2022; or

(b) as a tax agent registered under the Act, or under Part VIIA of the Income Tax Assessment Act 1936 as in force immediately before 1 March 2010; or

(c) under the supervision and control of a registered tax (financial) adviser within the meaning of the Act as in force immediately before 1 January 2022; or

(d) under the supervision and control of a tax agent registered under the Act, or under Part VIIA of the Income Tax Assessment Act 1936 as in force immediately before 1 March 2010; or

(e) as a qualified tax relevant provider; or

(f) under the supervision and control of a qualified tax relevant provider; or

(g) of another kind approved by the Board;

that included substantial involvement in one or more of the types of tax (financial) advice services described in section 90-15 of the Act, or substantial involvement in a particular area of taxation law to which one or more of those types of tax (financial) advice services relate.

40   Part 3 of Schedule 2

Repeal the Part.