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Corporations Amendment (Financial Advice) Bill 2014

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2013-2014

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

THE SENATE

 

 

 

CORPORATIONS AMENDMENT (FINANCIAL ADVICE) BILL 2014

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by authority of Senator Whish-Wilson)



Corporations Amendment (Financial Advice) Bill 2014

BACKGROUND     

Currently under the Corporations Act financial advice is classified under two categories. 'Personal advice' is financial product advice which takes into account the personal financial circumstances of the client. Any other financial product advice that does not take into account the client’s personal circumstances is termed 'general advice.’

The purpose of this Bill is to ensure that in reference to financial advice the term 'advice' can only be utilised in reference to financial advice that takes into account the personal circumstances of the consumer. Any 'general advice' will now have to be termed 'general information.'

This will help ensure personal advice is differentiated from information that is provided to sell general financial products with little or no consideration of an individual's financial situation or needs.

The Bill also mandates that when 'general information' is provided to a retail client the client must be warned that the information is not advice.

NOTES ON CLAUSES

Clause 2

Clause 2 outlines the Bill’s commencement. Clauses 1 - 3 of the Bill will commence on the day after the Act receives the Royal Assent.  Schedule 1 will commence the day after 6 months after the Act receives Royal Assent.

Schedule 1 - Amendments

Schedule 1 contains amendments the Corporations Act 2001 .

Items 1 to 17 and 20 to 22 provide for references to “general advice” to be replaced with references to “general information”.

Items 18 and 19 amend section 949A to require the existing warning to a client that general information does not take account of the client’s objectives, financial situation or needs to also include a warning that the general information is not advice.



 

Statement of Compatibility with Human Rights

 

Corporations Amendment (Financial Advice) Bill 2014

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Overview:

The purpose of this Bill is to ensure that in reference to financial product advice the term 'advice' can only be utilised in reference to financial advice that takes into account the personal circumstances of the consumer.

 

Human Rights Implications:

This Bill does not engage any of the applicable rights or freedoms.

 

Conclusion:

This Bill is compatible with human rights as it does not raise any human rights issues.