2021 Financial Services Agenda: Key Areas

22 January 2021

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For an overview of the changes we expect to see in Financial Services through the year ahead, click here.

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All Financial Services

  • The ongoing rollout of the Financial Accountability Regime (FAR) will have implications for the entire financial services industry. The proposed FAR would extend the existing Banking Executive Accountability Regime (BEAR) to all APRA regulated entities (Hayne Recommendation 6.8). As recommended by Commissioner Hayne, this will particularly effect: insurance (4.12) and superannuation (3.9), as well as ADI and private health insurers.
  • The House Economics Review of the Four Major Banks and other financial institutions will continue in 2021. The next hearing will be into the superannuation sector on 3 February 2021.
  • There are a number of sector wide recommendations arising from the Hayne Royal Commission including the proposal to introduce a compensation scheme of last resort (CSLR) (7.1), with legislation expected by July 2021. In relation to the broader regulatory regime for the sector, legislation to establish oversight of APRA and ASIC (6.14); and joint administration of the BEAR/FAR (6.6), also remains outstanding.
  • The Design and Distribution Regulatory Obligations technically are in force from 5 April 2021. However, the exemption issued by ASIC last year means they will not truly be effective until 4 October 2021. ASIC released a regulatory guide on the obligations in December.
  • The ALRC Review will produce its first report on the use of definitions in financial services and corporations legislation by 30 November 2021, a final report is not expected until November 2023.


  • One recommendation proposed by Commissioner Hayne to the banking industry remains outstanding, relating to the definition of a ‘small business’ in the Banking Code of Conduct (1.10). To date, the ABA has not indicated a position on this recommendation.
  • APRA continues to work to amend APS220 on land valuation of loans.
  • Legislation is outstanding in this space for three Hayne recommendations in relation to BEAR product responsibility (1.17); the removal of the point-of-sale exemption for retail dealers (1.7) and the requirement for ADI to cooperate with ASIC and APRA (6.7).

Financial Advice

  • The Morrison Government has committed to introduce legislation to abolish FASEA and establish a new supervisory and standards regime for financial advisers by July 2021.
  • Legislation is presently before Parliament to enact Royal Commission recommendations for an annual review of fee arrangements (2.1) and independence disclosure requirements (2.2). If this legislation passes Parliament, these provisions will come into effect from 1 July 2021.
  • In 2021, ASIC is undertaking consultation on potential measures to improve the affordability of financial advice. After finalising submissions this week, the regulator will hold roundtables in the first quarter of 2021.
  • Then, in 2022, a Review into the quality of financial advice will be undertaken (2.3).
  • A number of Hayne reforms have already been legislated and will come into effect in 2021, commencing 1 October 2021:
    • Reference checking and information sharing for AFSL holders (2.7)
    • Reporting compliance concerns (2.8)
    • Misconduct of financial advisers (2.9)

Insurance (Life & General)

  • A number of Hayne reforms which have already been legislated will come into effect in 2021:
    • On 5 April 2021 — Extending unfair contract terms to insurance contracts (4.7)
    • On 1 July 2021 — Anti-hawking of insurance (4.1)
    • On 5 October 2021 — Deferred sales model for add-on insurance (4.3)
    • On 5 October 2021 — Reasonable care for misrepresentation to an insurer (4.5)
  • APRA is presently working on the recommendations concerning: BEAR extension to insurers (4.12), group life related party engagements scrutiny (4.14); and group life SPS250 amendment, “fair and reasonable” (4.15).
  • Legislation is expected in the coming months in relation to universal terms relating to My Super group life policies (4.13).
  • In 2021, ASIC will undertake a review of life insurance commissions (2.5). Then, in 2022, the Government will commission a review into the general insurance and consumer credit insurance exemption from the conflicted remuneration ban (2.6).

Mortgage Broking

  • One number of Hayne reforms has already been legislated and will come into effect in 2021, commencing 1 October 2021 in relation to mortgage broker misconduct restrictions (1.6).
  • Then in 2022, the ACCC and the Council of Financial Regulators will review potential changes to remuneration and upfront and trial commissions by mortgage brokers (1.4). Subsequently, the Government will examine the potential for mortgage brokers to be treated as financial advisers (1.5).

Fintech, Payment Systems & Non-bank Lending


  • The Morrison Government is expected to announce its position on the superannuation guarantee as part of the Federal Budget on 11 May 2021.
  • Legislation is presently before Parliament to enact Royal Commission recommendations on prohibition on deducting advice fees from MySuper accounts (3.2) and limiting deductions on advice fees for Choice Accounts except with authority (3.3). If legislation passes Parliament these provisions come into force from 1 July 2021, however, a 12-month transition period will apply for those arrangements entered into before the commencement.
  • Legislation is outstanding for one additional recommendation to extend BEAR to RSE Licensees (3.9). In January 2020, the Treasurer released a proposals paper which confirmed the Government intended to introduce legislation to Parliament by the close of 2020. This was likely subject to delay due to COVID-19.
  • A number of Hayne reforms have already been legislated and will come into effect in 2021, commencing 1 July 2021:
    • RSE prohibited from assuming obligations other than as a trustee (3.1)
    • No hawking of superannuation (3.4)

For further information on our banking and financial services capabilities please contact:

Richard King
Managing Partner, Melbourne
+61 407 766 633


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