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ASFA Action Issue 970

In this issue:

Operational risk financial requirement – APRA guidance SPG 114 updated 

As reported in ASFA Action issue 969, APRA has recently finalised updates to SPS 114 Operational Risk Financial Requirement that will apply from 1 July 2025. 

APRA has now also finalised updates to the accompanying guidance, SPG 114, and released a response paper finalising its consultation process as well as a ‘marked up’ version of SPS 114.  

The response paper highlights some of the key changes APRA has made to SPS and SPG 114, including:

DBFO reforms: legislative instrument to address an unintended issue  

ASIC has registered the ASIC Corporations (Amendment) Instrument 2024/809 to amend relief around the provision of a Financial Services Guide (FSG), to address an issue that has arisen following the passage of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 (the DBFO Act; see ASFA Action issue 954 for background).

Sections 941A and 941B of the Corporations Act 2001 require providing entities to give retail clients an FSG if they provide a financial service to the client unless a situation described in section 941C applies. The ASIC Corporations (Financial Services Guides) Instrument 2015/541 allows financial services licensees and authorised representatives (providing entities) to, in place of giving an FSG to a client, make available website disclosure information for dealing in a financial product for the purpose of implementing financial product advice that the providing entity provided to that client.

The DBFO Act implemented tranche 1 of the Government’s response to the Quality of Advice Review. Amongst other things, it amended section 941C to insert subsection 941C(5A) which permits providing entities to make available ‘website disclosure information’ as a further situation in which they do not have to give clients an FSG.

There are requirements that must be met before a providing entity may rely on website disclosure information instead of giving an FSG to a client. The DBFO Act required that the financial service provided to the client had to be financial product advice. This condition meant providing entities had to still give a client an FSG if they wanted to deal in a financial product for the purpose of implementing the advice they provided to the client, including if the entity sought to apply for a financial product on the client’s behalf.

The Explanatory Statement notes that this outcome was not consistent with the policy intent of the DBFO Act, which included reducing regulatory burden on providers of financial product advice. It also limited the flexibility that providing entities had to otherwise disclose information required in an FSG. To address this, Instrument 2024/809 ensures that website disclosure information can be made available for dealing in a financial product where the purpose of the dealing is to implement financial product advice that the providing entity provided to that client. The other conditions that apply to website disclosure information have not changed.

The Explanatory Statement also indicates that Instrument 2024/809 is intended to be an interim measure to provide certainty for providing entities ahead of consideration of potential future legislative changes by the Government to implement the relief in the primary law or regulations.


 

ASFA REGULATORY WATCHLIST

ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.

 

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