Introductory Info

Date introduced: 9 December 2020
House: House of Representatives
Portfolio: Treasury
Commencement: Sections 1-3 on Royal Assent; Schedules 1-3 on 1 July 2021.

Purpose of the Bill

The purpose of the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 (the Bill) is to put into effect four of the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Banking Royal Commission).[1]

Structure of the Bill

The Bill comprises three Schedules:

• Schedules 1 and 2 amend the Corporations Act 2001 in relation to ongoing fee arrangements and disclosures of lack of independence respectively
• Schedule 3 amends the Superannuation Industry (Supervision) Act 1993 in respect of advice fees in superannuation.

Background

The Banking Royal Commission was established by Letters Patent dated 14 December 2017.

The Letters Patent required Commissioner Hayne to inquire into, and report on, whether any conduct by financial services entities, including banks and their associated entities, might have amounted to misconduct and whether any conduct, practices, behaviour or business activities by those entities fall below community standards and expectations.[2]

The Banking Royal Commission submitted its final report, containing some 76 recommendations in February 2019.[3] Importantly, not all of the recommendations required legislative action.

Releasing the Government’s response to the recommendations, the Treasurer, Josh Frydenberg, stated:

… the Government’s principal focus is on restoring trust in our financial system and delivering better consumer outcomes, while maintaining the flow of credit and continuing to promote competition. These objectives are vitally important to the health of the economy and therefore to the health of our community.[4]

This Bill is one of a number of Bills which have already been enacted as a direct response to the recommendations of the Banking Royal Commission.

Recommendations addressed	Relevant legislation
6.1, 6.2	Financial Sector Reform (Hayne Royal Commission Response—Stronger Regulators (2019 Measures)) Act 2019
1.2, 1.3, 4.2, 4.7	Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2019
1.6, 1.15, 2.7, 2.8, 2.9, 3.1, 3.4, 3.8, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.8, 6.3, 6.4, 6.5, 6.9, 6.11, 7.2	Financial Sector Reform (Hayne Royal Commission Response) Act 2020 and Corporations (Fees) Amendment (Hayne Royal Commission Response) Act 2020
2.1, 2.2, 3.2, 3.3	This Bill

Committee consideration

Senate Selection of Bills Committee

At its meeting of 9 December 2020, the Senate Standing Committee for the Selection of Bills determined that the Bill should not be referred for inquiry and report.[5]

Senate Standing Committee for the Scrutiny of Bills

The comments by the Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) about amendments in Schedule 1 to the Bill which provide for significant matters to be set out in delegated legislation are canvassed under the relevant heading below.[6]

Policy position of non-government parties/independents

At the time of writing this Bills Digest, there have been no comments by members of non-government parties or independents about the measures in this Bill.

Position of major interest groups

At the time of writing this Bills Digest, there have been no comments by stakeholders about the measures in this Bill.

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[7]

Parliamentary Joint Committee on Human Rights

At the time of writing this Bills Digest the Parliamentary Joint Committee on Human Rights had not commented on the Bill.

Key issues and provisions

Schedule 1

Harm to be addressed

Nature of payments to financial advisers

Financial advisers have traditionally been remunerated by way of commissions received from product providers for placing clients with particular products, sometimes paid as a percentage of funds under management.[8]

In situations where the client pays a substantial proportion of the adviser’s remuneration directly (known as ‘fee for service’) it is common for this remuneration to be ongoing in nature. For example, an adviser might charge a client an ongoing annual fee calculated as a percentage of the client’s funds under management (known as an asset-based fee) or a flat dollar amount. This annual fee generally covers a range of advisory services provided to (or available to) clients. As opposed to professions or other occupations that tend to charge for transactional, one-off services or advice, advisers’ remuneration structure is partly reflective of the notion that the benefits of financial advice tend to be realised over the medium to long-term, and therefore remuneration structures tend to reflect the ongoing nature of the adviser-client relationship.

As a result of this unique remuneration structure, in some situations clients of advisers that pay ongoing fees for financial advice receive little or no service. Of the clients that do receive a service for the fees they are paying, some are unaware of the precise magnitude of those fees (or the fees advisers are receiving from third parties) or they continue paying ongoing fees as a result of their own disengagement. This is despite the fact that most ongoing advice contracts allow a client to ‘opt-out’ at any time.[9]

This problem was partially addressed by the enactment of the Corporations Amendment (Future of Financial Advice) Act 2012 which inserted the rules which are currently in operation. However, those rules only applied to new clients.[10]

ASIC investigations

The Australian Securities and Investments Commission (ASIC) investigated multiple instances of Australian financial services (AFS) licensees charging customers fees for annual financial advice reviews where the reviews were not provided.[11] ASIC identified two situations in which this arose, being where:

(a)   a customer who has a financial adviser pays fees to receive ongoing advice from that adviser, but the adviser does not provide the advice or

(b)   a customer who does not have a financial adviser (because, for example, the adviser departed the advice licensee or retired) is charged a fee for ongoing advice, which the customer does not receive.[12]

The Banking Royal Commission noted that the relevant report by ASIC set out the following causes for such conduct being:

• the financial advice industry had a culture of reliance on automatic periodic payments such as sales commissions and adviser service fees
• some advice licensees prioritised advice revenue and fee generation over ensuring that they delivered the required services
• some licensees and advisers did not keep adequate records to enable monitoring and analysis and
• some licensees did not develop and enforce effective monitoring and checking procedures to prevent systemic failures.[13]

What the Bill does

Currently, Division 3 of Part 7.7A of the Corporations Act sets out the rules for charging ongoing fees to clients.

They apply to ongoing fee arrangements—that is, a financial services licensee gives personal advice to a person as a retail client and that person enters into an arrangement with the licensee the terms of which include that a fee is to be paid during a period of more than 12 months.[14]

The fees that are payable under such an arrangement are called ongoing fees.[15]

A financial services licensee and the representative of a financial services licensee who enters into an ongoing fee arrangement will be a fee recipient for the purposes of Part 7.7A.[16]

Fee disclosure statement—timing

Currently a fee recipient must provide a person with a fee disclosure statement annually and a renewal notice every two years.[17] Items 18 and 19 in Part 1 of Schedule 1 to the Bill repeal these requirements. Instead, the Bill requires that a client must renew their arrangements every year. This will be done with a single document—the fee disclosure statement.

Item 9 in Part 1 of the Schedule 1 to the Bill repeals and replaces subsection 962G(1) of the Corporations Act so that a fee recipient must give a client a fee disclosure statement no later than 60 days after the anniversary day for the arrangement each year.[18] This is a civil penalty provision.

Fee disclosure statements—content

Item 11 in Part 1 of Schedule 1 to the Bill repeals and replaces subsection 962H(1) to require the fee disclosure statement to include information about fees charged for the previous 12 months as well as fees to be charged for the upcoming 12 months. The information relating to the upcoming year must include:

• the amount of each ongoing fee payable by the client to the fee recipient
• the services that the client is entitled to receive
• the amounts of any ongoing fees payable after the end of the upcoming year for a service provided in that year and
• any other information that may be prescribed by the Regulations.[28]

If the amount of any ongoing fee cannot be determined, the fee recipient must provide a reasonable estimate of the fee and a statement about how it is calculated.[29] According to the Explanatory Memorandum to the Bill:

A reasonable estimate should be based on all of the relevant information available to the fee recipient at the time of the estimate, and reflect their most accurate account of the client’s position at that time. Fee recipients should factor in information known to them at the time of providing the estimate such as employer contributions that are expected to be made throughout the year to a client’s superannuation fund, additional investments that may be made by a client based on the advice provided and any known large withdrawals, such as an asset-based fee that the client is being charged.[30]

In addition, the fee disclosure statement must:

• inform the client that he, or she, may renew the ongoing fee arrangement by notifying the fee recipient in writing
• state that the arrangement will terminate if the client does not elect to renew
• advise that the client is deemed to have elected not to renew if an election to renew has not been received within the renewal period and
• state that the renewal period is 120 days beginning on the anniversary day.[31]

Requirement for consent

Item 24 in Part 1 of Schedule 1 to the Bill inserts proposed Subdivision C—Consent required for deduction of ongoing fees from accounts (comprising proposed sections 962R–962W) into the Corporations Act. Proposed Subdivision C requires a fee recipient to receive express written consent to deduct, arrange to deduct or to accept an amount for payment of fees under an ongoing fee arrangement.

The requirement for written consent applies to accounts that are not linked to a credit card or a basic deposit product.[32] Under proposed section 962R of the Corporations Act, the fee recipient must not deduct the amount of the ongoing fee from the account unless all of the following are satisfied:

• the account holder has given his, or her, written consent that amounts may be deducted in respect of ongoing fees
• if ASIC has determined, by legislative instrument, (under proposed section 962T) any requirements for the giving of such consent—it complies with those requirements and
• at the time of making the deduction the consent has not been withdrawn, varied (in a way that would not authorise the deduction) or ceased to have effect.[33]

In addition, if the account holder holds the account jointly with one or more other persons, no amount may be deducted unless all of the account holders have given consent.[34]

Proposed section 962S of the Corporations Act operates where:

• an ongoing fee is, or will be, payable to a fee recipient under an ongoing fee arrangement and
• a person (called the account holder) holds an account with another person (the account provider) who is not a fee recipient
• the account is not an account linked to a credit card or a basic deposit product and
• the fee recipient proposes to arrange with the account provider for an ongoing fee to be deducted from the account holder’s account.[35]

In that case, the fee recipient must not arrange for the account provider to deduct the relevant amount unless:

• the account holder has given his, or her, express written consent, and that consent complies with any requirements that have been determined by ASIC
• the fee recipient has given a copy of the consent to the account provider and
• at the time that the copy of the consent is given to the account provider it has not been withdrawn, varied (in a way that would not authorise the deduction) or ceased to have effect.[36]

The relevant consent must also be obtained from all persons who hold the account jointly with the account holder.[37]

In addition, a fee recipient must not accept deductions which have been made unless the relevant consents, as set out above, have not be withdrawn, varied or ceased to have effect.[38]

Civil penalty and refund orders

The prohibitions set out in proposed subsection 962R(4) (a fee recipient must not deduct ongoing fees without consent), proposed subsection 962S(5) (a fee recipient must not arrange for deduction of ongoing fees without consent) and proposed subsection 962S(8) (a fee recipient must not accept such deductions) are each a civil penalty provision.[39] The exception to this general rule is where a fee recipient who has accepted deductions without the valid consents, repays that amount into the account holder’s account within 10 business days of the day they were accepted.[40]

Importantly, item 25 in Part 1 of Schedule 1 to the Bill inserts proposed section 1317GB into the Corporations Act to provide an additional remedy where there has been a contravention of proposed subsections 962R(4), 962S(5) or 962S(8). In those circumstances a Court may order that the fee recipient refund an amount if the Court is satisfied:

• either:
  • the fee recipient knowingly or recklessly[41] contravened the requirement that a fee recipient must not deduct ongoing fees without consent or
  • the fee recipient knowingly or recklessly contravened the requirements that a fee recipient must neither arrange for deduction of ongoing fees without explicit consent nor accept such deductions and
• it is reasonable in all the circumstances to make the order.[42]

This order differs slightly from other orders under the Corporations Act because a refund order may be made by the Court on its own initiative during proceedings before it, on application by ASIC, or on the application of the account holder.[43]

Change to consent

Proposed section 962U of the Corporations Act permits a person who is an account holder to withdraw or vary their consent at any time, by notice in writing to the fee recipient.

A fee recipient who receives a notice withdrawing or varying consent must, within 10 business days of receipt confirm receipt of the notice in writing to the account holder. In addition, where an account provider has previously been given a copy of the account holder’s consent, the fee recipient must give the account provider a copy of the notice withdrawing or varying consent. This is a civil penalty provision.[44]

Proposed section 962V sets out the circumstances in which a consent ceases to have effect. This will generally be at the end of the period of 150 days after the anniversary day for the ongoing fee arrangement.[45] In addition, the consent will terminate at the time an ongoing fee arrangement terminates. Where a new consent is given in relation to the ongoing fee arrangement an earlier consent will terminate.

If a consent in relation to an ongoing fee arrangement ceases to have effect, then a fee recipient who had given a copy of the original consent to an account provider must give written notice of the cessation to the account provider within 10 business days of the cessation. This is a civil penalty provision.[46]

Further, item 7 in Part 1 of Schedule 1 to the Bill inserts proposed section 962FA into the Corporations Act so that an ongoing fee arrangement terminates if any of the matters relating to consent in new Subdivision C have not been complied with.

Record keeping

Item 24 inserts proposed section 962X into the Corporations Act to require a fee recipient to keep records that will enable the fee recipient’s compliance with the rules about ongoing fee arrangements to be readily ascertained. Proposed subsection 962X(2) allows for regulations to specify the records that the fee recipient must keep as part of the record keeping obligation. Item 35 amends Schedule 3 of the Corporations Act so that the maximum penalty for contravention of the record keeping requirements is five years imprisonment.

Commenting in relation to these provisions the Scrutiny of Bills Committee stated that its expectation:

… is that the rationale for the imposition of significant penalties, especially if those penalties involve imprisonment, will be fully outlined in the explanatory memorandum. In particular, penalties should be justified by reference to similar offences in Commonwealth legislation. This not only promotes consistency, but guards against the risk that liberty of the person is unduly limited through the application of disproportionate penalties.[47]

The Scrutiny of Bills Committee explained its concerns as follows:

… significant matters such as recordkeeping obligations which are subject to significant penalties, as in proposed section 962X, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this instance, the explanatory memorandum contains no justification regarding why it is necessary to allow such significant matters to be set out in delegated legislation.

From a scrutiny perspective, the Committee is concerned that the scope and types of records that must be kept in order to comply with the recordkeeping obligation is not clear on the face of the Bill, with details in relation to the records that must be kept to instead be set out in delegated legislation.[48]

That being the case, the Committee has sought further detailed advice from the Treasurer.[49]

Application

Item 26 in Part 1 of Schedule 1 to the Bill inserts proposed Part 10.46 into the Corporations Act to set out the application and transitional provisions relating to the amendments in Schedule 1 to the Bill. Within new Part 10.46, proposed section 1673A provides that the amendments apply in relation to an ongoing fee arrangement entered into on or after 1 July 2021.

Proposed section 1673B sets out the rules that apply to an ongoing fee arrangement that is in force immediately before 1 July 2021. In that case a 12 month transition period—being the period from 1 July 2021 to 30 June 2022—will apply. A fee recipient is required to give his, or her, clients a fee disclosure statement which complies with the requirements of the Bill in relation to the ongoing fee arrangement before the end of the 12 month transition period.

The day that the fee recipient provides the client with a fee disclosure statement during this period is the anniversary day for that arrangement in each subsequent year.

Financial implications

According to the Explanatory Memorandum, Schedule 1 has nil financial impact for the Government.[50] However,

The Office of Best Practice Regulation has agreed to an estimated average annual compliance cost of $28.4 million for the measures relating to recommendation 2.1. This includes $11.7 million of upfront costs in the year of commencement, followed by an annual compliance cost of between $21.2 million and $33.7 million in subsequent years.[51]

Schedule 2

Harm to be addressed

A financial adviser will contravene subsection 923A(1) of the Corporations Act if he, or she, uses any of the restricted words or expressions, being independent, impartial or unbiased, in relation to the financial services he, or she, provides unless all of the following are satisfied:

• the financial adviser does not receive:
  • commissions (other than commissions rebated in full to the client)
  • any form of remuneration calculated on the basis of the volume of business placed by the adviser with a product issuer
  • any other gift or benefit from a product issuer that may reasonably be expected to influence the adviser[52]
• neither the financial adviser’s employer, nor any person on behalf of whom the adviser provides financial services, receives any of those benefits[53]
• the financial adviser operates free from direct or indirect restrictions relating to the financial products in respect of which he or she provides financial services[54] and
• the financial adviser operates without any conflicts of interest that might:
  • arise from his or her associations or relationships with issuers of financial products and
  • be reasonably expected to influence the adviser in carrying on a financial services business or providing financial services.[55]

According to the Banking Royal Commission:

At present, there is no requirement for a financial adviser who does not satisfy those requirements to explain to a retail client that he or she is not independent. A client may be able to infer that fact from some of the matters disclosed in a [financial services guide]. In my view, however, this is not sufficient. A financial adviser who does not meet the requirements set out above and who provides personal advice to a retail client should be required to bring that fact to the client’s attention, and to explain, prominently, clearly and concisely, why that is so. I consider that disclosure of that kind is likely to be more readily understood by, and therefore more useful to, a client than the existing requirement merely to disclose, in general terms, certain information about the providing entity.[56]

What the Bill does

Currently section 941A of the Corporations Act sets out the obligations of a financial services licensee to give a person who is a retail client a Financial Services Guide. Under section 942B, the Financial Services Guide must include, amongst other things:

• information about the kinds of financial services (the authorised services) that the providing entity is authorised by its licence to provide, and the kinds of financial products to which those services relate[57]
• information about who the providing entity acts for when providing the authorised services[58] and
• information about the remuneration (including commission) or other benefits that the providing entity or related body corporates, directors or employees of the providing entity are to receive in respect of, or that is attributable to, the provision of any of the authorised services.[59]

Item 5 in Schedule 2 to the Bill inserts proposed paragraph 942B(2)(fa) into the Corporations Act to specify additional matters which are to be included in the Financial Services Guide. The additional requirements arise if the authorised services include the provision of personal advice to retail clients, and the providing entity would contravene subsection 923A(1) by using a restricted word or expression in relation to such provision of personal advice. In that case the Financial Services Guide must include a statement:

• that states that the providing entity is not independent, impartial or unbiased in relation to the provision of personal advice, and explains the reasons why
• if any other word or expression has been specified as a restricted word or expression in regulations, states that the providing entity is not able to assume or use the restricted word or expression in relation to the provision of personal advice, and explains the reasons why and
• meets the requirements (if any) determined in an instrument under proposed subsection 942B(7A).

Item 6 of Schedule 2 to the Bill inserts proposed subsections 942B(7A) and (7B) into the Corporations Act to empower ASIC to determine requirements, by legislative instrument, for the purposes of proposed paragraph 942B(2)(fa). Any such legislative instrument may include matters such as the form of words to be used for the statement, specific information to be included in the statement or requirements about the presentation, structure and format of the statement.

Section 941B of the Corporations Act creates an obligation on an authorised representative of a financial services licensee to give a Financial Services Guide to a person as a retail client. Section 942C of the Corporations Act specifies the main requirements to be included in the Guide.

Item 7 in Schedule 2 to the Bill inserts proposed paragraph 942C(2)(ga) into the Corporations Act in equivalent terms to proposed paragraph 942B(2)(fa) to extend the obligation to provide additional information in the Financial Services Guide to an authorised representative of a financial services licensee. Further, item 8 inserts proposed subsections 942C(7A) and (7B) in equivalent terms to those in item 6 of Schedule 2 to the Bill to allow for the making of a legislative instrument by ASIC.

Application

Item 9 inserts proposed Part 10.47 into the Corporations Act to set out the application and transitional provisions relating to Schedule 2 to the Bill. Specifically, proposed section 1674 provides that the amendments made by Schedule 2 apply in relation to a financial service provided on or after 1 July 2021.

In addition, proposed section 1674A inserts a transitional rule which operates if a providing entity has given a Financial Services Guide to the client under section 941A or 941B of the Corporations Act before 1 July 2021 and will provide a financial service to the client on or after 1 July 2021. In that case, the providing entity must, before the financial service is provided, give the client another Financial Services Guide which complies with the amendments in Schedule 2. In the alternative, the providing entity may give the client a Supplementary Financial Services Guide that contains the relevant statement.

Financial implications

According to the Explanatory Memorandum, Schedule 2 has nil financial impact on the Government.[60] This measure is expected to result in low increases to compliance costs.[61]

Schedule 3

Harm to be addressed

According to the Banking Royal Commission:

One of the key elements contributing to the charging of fees for no service was the invisibility of the charges made …

… No doubt the trustee of the fund may resort to the funds held in order to reimburse the trustee for outgoings incurred in the course of performance of the trust. No doubt the trustee may resort to the funds held to meet fees owing by members to the trustee under the rules of the fund. Hence fees like administration fees are properly charged to members’ accounts.

But ongoing service fees payable to an advice licensee or the authorised representative of an advice licensee are neither outgoings that the trustee incurs in performance of the trust nor fees charged to members under the rules of the fund …[62]

Commissioner Hayne considered that the law should not permit the deduction of advice fees of any kind from a MySuper account stating:

It is difficult to imagine circumstances in which a member would require financial advice about their MySuper account. If a member wants financial advice, the cost of that advice should be charged to and paid by the member directly.[63]

What the Bill does

Currently Part 11A of the Superannuation Industry (Supervision) Act 1993 (SIS Act) contains the general fees rules about charging and deducting fees from a superannuation interest. For instance, Part 11A prohibits the trustee of a regulated superannuation fund from charging, amongst other things, entry fees[64] or exit fees.[65]

Superannuation funds often provide financial product advice to their members. This is referred to as intrafund advice—although the term is not defined in the SIS Act. The financial product advice can be general (that is, advice that does not take into account the particular circumstances of the client) or personal (advice that does take into account those circumstances).

Section 99F of the SIS Act contains specific restrictions on the types of personal advice that superannuation trustees can charge across their membership as intrafund advice. The types of personal advice for which a superannuation trustee will not be able to charge across the membership of the fund are those types of advice that are likely to be more complex in nature and therefore more costly to provide.[66]

Amending the general fees rules

Item 3 in Part 1 of Schedule 3 to the Bill inserts proposed section 99FA into the SIS Act so that the trustee of a regulated superannuation fund must not pass on the cost of providing financial product advice to a member of the fund without the consent of the member. To that end, proposed subsection 99FA(1) restricts the circumstances in which intrafund advice may be charged to the following:

• the cost is to be paid in accordance with the terms of an arrangement entered into by the member
• the trustee passes the cost on in accordance with the terms of a written consent of the member
• if the arrangement is an ongoing fee arrangement the consent requirements under Part 7.7A of the Corporations Act have been complied with[67]
• if the arrangement is not an ongoing fee arrangement the member must explicitly consent to the trustee passing on the cost of providing financial product advice to the member and comply with any requirements determined by ASIC under proposed subsection 99FA(2) and
• the trustee has the consent or a copy of the consent.

By linking the definition of an ongoing fee arrangement to Part 7.7A of the Corporations Act, the obligations which attach to that term will apply to an ongoing fee arrangement under proposed section 99FA—that is, advisers are required to renew the arrangement annually,[68] and outline to the client both the services that will be provided and the fees that will be charged in the next 12 months.[69] A failure to comply with these requirements will result in the statutory termination of an ongoing fee arrangement.[70]

The Bill empowers ASIC to make a determination, by legislative instrument, about the contents of a consent to a non-ongoing fee arrangement.[71]

Amending the MySuper charging rules

In addition to the general fees rules in Part 11A, Part 2C of the SIS Act has specific rules which apply to MySuper products. Legislation providing for default superannuation products called 'MySuper' was enacted in 2012.[72] Since 1 January 2014, only funds offering a MySuper product were eligible to receive default superannuation contributions relating to new employees.[73] The MySuper changes were aimed at providing a simple, cost-effective, balanced product for the vast majority of Australian workers who are invested in the default option of their current fund. MySuper is a basic fund without unnecessary features and fees.[74]

Within Part 2C, section 29V of the SIS Act specifies the fees that may be charged in relation to a MySuper product.[75] Section 29VA provides that the trustee of a regulated superannuation fund that offers a MySuper product may only charge a fee in relation to the MySuper product if the fee is in accordance with the charging rules.

Part 2 of Schedule 3 to the Bill amends sections 29V and 29VA of the SIS Act so that fees paid by holders of MySuper products cannot be charged in respect of an ongoing fee arrangement.[76]

According to the Explanatory Memorandum to the Bill:

The amendments are not intended to prevent holders of MySuper products from accessing financial product advice through their superannuation account on an ad hoc or once-off basis. The amendments do not prevent a member accessing multiple instances of one-off advice. However, to ensure that members’ rights are protected, they need to enter into a new non-ongoing fee arrangement each time they seek advice.[77]

Application

The amendments in Schedule 3 to the Bill apply at the following times:

• for a fee payable under an arrangement entered into on or after 1 July 2021—on and after 1 July 2021 and
• for a fee payable under an arrangement entered into before 1 July 2021—on and after 1 July 2022.[78]

Financial implications

According to the Explanatory Memorandum, Schedule 3 has nil financial impact on the Government.[79] This measure is expected to result in low increases to compliance costs.[80]