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Financial planners will be able to break the financial advice law with impunity unless a client takes private action, the government says.
An explanatory memorandum tabled with the changes to Labor's Future of Financial Advice legislation says the Australian Securities and Investments Commission ''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 the section which requires fee disclosure statements to be provided to retail clients with ongoing fee arrangements entered into before July 1, 2013,'' the memorandum says.
The disclosure requirement is due to bite at the end of June when financial planners will be required to send statements to their long-term clients telling them how much money they are continuing to be paid from their accounts.
In an effort to stop this should the legislative changes not be approved by the Senate, the memorandum foreshadows regulations that would achieve the same effect and then be withdrawn when and if the Senate approved the changes.
The unusual provision was crafted by the then assistant treasurer Arthur Sinodinos before he stepped aside on Wednesday over his involvement in a NSW Independent Commission Against Corruption hearing. It is justified because of the ''time sensitive'' nature of the proposed changes.
Introduced at the same time as the Prime Minister's red tape reduction package, the changes would also remove the catch-all requirement for financial planners to act in the ''best interests'' of their clients and re-allow ''conflicted remuneration'' in some circumstances.
The assurance that financial planners could disobey the present law free from prosecution is not complete. The memorandum says: ''ASIC's stance does not remove a client's right to take private action against a provider.''
Industry Super Australia urged the government to back away from the measures. ''The risks are too great,'' chief executive David Whiteley said. ''There would be merit in bringing together the industry to explore opportunities for a sustainable policy outcome that allows consumers to have confidence in advice provided to them.''
Another measure introduced with the red-tape reduction bills abolishes the Australian Charities and Not-For-Profits Commission. The commission is a one-stop regulator that enables charities and not-for-profits to deal with a case manager rather than many organisations. Forty organisations including the RSPCA, Wesley Mission Victoria and Lifeline signed an open letter to the Prime Minister asking for the ACNC to stay. In an apparent concession, the repeal bill refers to its replacement by ''a successor agency''.
Other expected changes missing from the bills introduced with the Prime Minister's deregulation statement include the axing of gender-reporting rules for company boards and a rule that allows as few as 100 shareholders in a public company to call an extraordinary general meeting. Both proposals have been held back to allow more consultation.
The government will ask the Parliament to vote on the measures on March 26.