The PJC report, handed down late yesterday, recommended a change relating to the disclosure provisions in the transition period for financial advisers who would be caught up in the new registration requirements.
According to the committee, this essentially allows affected advisers an extra six months in which to comply with changes to a new disclosure statement. However, this assumes all advisers currently have some form of compliant disclosure and does not account for advisers who currently do not include any such disclosure and who will be caught up by the changes.
The legislation originally outlined a three-year transition period, and within the first 18 months advisers would be able to continue to provide tax-related advice as long as they included a disclaimer stating they are not a registered tax agent under the Tax Agent Services Act 2009.
This is similar to what advisers are required to do under the current carve-out from TASA, the PJC noted, recommending a period of six months during which both the current disclaimer and the new disclaimer can be used.
However, Financial Services Council (FSC) chief executive John Brogden expressed disappointment at the lack of traction the financial services industry had gained in the PJC findings.
“The PJC recommends no changes to the legislation at all,” he said, adding that the committee findings came “despite very clear evidence from the FSC, [the Association of Financial Advisers and the Financial Planning Association] that the TASA legislation will create havoc for financial advisers”.
The FSC said it will push ahead with attempts to have the legislation amended in parliament by the Coalition and independents.
Financial Planning Association (FPA) chief executive Mark Rantall reiterated his calls for planners to be granted a 12-month exemption to the changes from 1 July 2013.
“We believe, as an example, the regulatory requirement issued by Treasury today for a higher level study of commercial law is excessive when added to tax law course,” he said last night.
“A 12-month extension of the exemption is appropriate whilst we continue to work with Treasury, [the Australian Securities and Investments Commission] and the Tax Practitioners Board (TPB) to finalise this legislation.”
In its final report, the PJC also recommended proposals from the FPA and FSC to amend Regulatory Guide 175 Licensing: Financial product advisers – Conduct and disclosure to address conflicting best interests requirements.
The PJC also asked for the TPB to reconsider the requirement for a “sufficient number” of individuals to be registered as tax agents before a company is eligible for registration.
A dissenting report from the Coalition called for the Bill to be deferred until June 2014.
It also recommended parliament extend current transitional arrangements exempting financial planners and advisers from the TASA regime by 12 months to 30 June 2014 so that the government and the TPB can “finalise all of the legislation and associated regulations to enable an orderly transition and implementation period”.
