The Government is committed to removing the opt-in requirement for advisers’ clients, Assistant Treasurer Arthur Sinodinos reassured financial planners.
The requirement proved expensive for advisers to implement which clashes with the Abbott Government’s aim to strike the right balance of consumer protection and making sure affordable and competent advice is available, Sinodinos told a Liberal Party lunch in Sydney on Friday.
“This requirement has created practical difficulties while doing little to increase consumer protection. Again, the cost savings realised by industry as a result of the removal of opt-in should be passed on to consumers.”
Sinodinos also said the Government wants to make sure a reintroduction of commissions would not encourage trouble-makers in the industry.
“The Government remains committed to ensuring that commissions do not provide the basis for mischief making and do not have a perverse effect on pricing that ultimately impacts the consumer and the provision of certain products to the market.”
Financial Planning Association policy and conduct general manager Dante de Gori told Wealth Professional
the FPA does not support the return to commissions on general advice “in any shape or form”.
“We want to really make sure the government is committed to helping advisers and making sure there is scaled advice that gives people more access to planners without jeopardising the best interests duty.”
Sinodinos said the Government is taking into account submissions received on FOFA reforms, and its agenda for the changes comes about largely from feedback already received from the financial services industry.
“A strong financial services sector is vital to the strength of Australia’s economy. To allow it to flourish and so support Australia’s economic growth, we need to make sure regulation of the sector is effective and practical, and does not reach beyond what is necessary to protect consumers and support the industry,” he said.
The public can make submissions on the FOFA reforms until 19 February.
Industry representative bodies have indicated they are largely happy with proposed changes, but say they will make submissions to make sure minor tweaks are considered.
The exception to this is Industry Super Australia, which is worried the amendments will lessen consumer protections and bring conflicts of interest back into financial advice.
“Industry Super Australia is concerned that these proposed changes will re-permit the payment of conflicted remuneration and re-open the debate about whether a financial planner is an impartial adviser or a sales rep,” ISA chief executive David Whiteley said.
The legislation is on track to be introduced into Parliament late in the autumn sittings, for debate in the winter sittings. The regulations are expected to be finalised in late March.
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