Brokers have been advised to understand what steps they need to take when the “next wave” of regulatory changes come into effect in October.
Connective has warned brokers to be prepared for several new incoming laws that have been introduced as part of the federal government’s response to the recommendations of the Hayne Royal Commission into misconduct in banking, pensions and financial services. .
Noting that the pipeline of new regulations has not slowed down in 2021 for the brokerage industry despite the disruption caused by the COVID-19 crisis, the aggregator reported that the laws will force some brokers to change the way they conduct their activities.
From October 2021, six new laws will come into force that will impact brokers and the financial services industry.
As such, Connective has urged brokers to ensure they understand the steps they will need to take and the tools they will need to remain compliant, particularly for Australian Credit License (ACL) holders. ).
Connective Group legal counsel Daniel Oh said news laws are “diverse” and the devil can be in the details.
He said: “While the changes for brokers are not as significant as what the industry has had to adapt to in the best interest, brokers should prepare as soon as possible as these new laws are upon us. doors.
“Brokers have had to adapt to such a volume of change and disruption over the past 18 months which has been consumer-friendly. So we want to highlight these latest new laws to make it as easy as possible for brokers to ensure they are compliant.
Mr Oh said Connective had worked with the Mortgage & Finance Association of Australia (MFAA) through the latest regulatory process “to achieve the best outcome for the industry”.
The Treasury recently announced that it would modify the obligations of brokers under the design and distribution obligation regime following industry feedback.
It said it will make changes to “clarify that more simplified obligations (i.e. only record keeping and notification obligations) for distributors only apply where the intermediary has the duty to act in the best interests of the consumer, for example where personal advice is provided under the Corporations Act, or where mortgage brokers engage in similar conduct”.
MFAA Chief Executive Mike Felton provided a video update after the Treasury announced the upcoming changes, where he said the association had been in talks with the Treasury to change the bonds.
In the update, Mr. Felton said the MFAA felt the additional obligations for brokers were not appropriate given that they are now bound by a best interest obligation (BID), “which is a much higher obligation [and] takes into account personalized advice according to needs, objectives, priorities, preferences”.
The Australian Securities and Investments Commission (ASIC) said it would take a “reasonable approach” when enforcing new financial services laws in their early stages of implementation, given their significant impact and the current COVID-19 environment.
ASIC Chairman Joe Longo said the corporate regulator would take into account the magnitude of the changes and challenges in the current operating environment, while noting that the industry will receive final guidance on two measures relatively close to the start date.
The Loan Market Group hosted a webinar last week to discuss the regulatory changes, during which executive director Sam White said aggregators should help “shape” lawmakers’ views on how new laws will work. apply to brokers.
He also said the second role of an aggregator is “to try to create rules, structure and processes” around regulations, which are often principled and “nebulous”.
Connective will host a regulatory update webinar next Tuesday (September 7) as part of its Compliance Series, where it will cover all the upcoming changes to financial services laws.
[Related: Association working to ‘fix’ reference checking laws]