It was indeed a big day in Australian Parliament yesterday: Not only did the Assistant Treasurer announce that he would be standing down, but the hotly debated FoFA amendments that he headed were introduced as part of the red tape legislation.
In introducing the changes, Prime Minister Tony Abbott said the red tape repeal was to trash 9,500 “unnecessary or counter-productive” regulations, and 1,000 acts of Parliament he said were redundant, 7 News
Select FoFA amendments were also introduced as part of the red tape legislation, which has Labor is claiming that the government is using the legislation in an effort to “hide” the changes, reports say.
“This is dodgy law, done in a dodgy way, which will lead to dodgy outcomes,” opposition leader Bill Shorten told Parliament.
But the Financial Planning Association of Australia (FPA) has welcomed an eleventh hour change in the amendments, which has seen a restriction to the general advice exemption under FoFA.
The new amended form of the general advice component essentially restricts the receipt of conflicted remuneration to employees only of a financial services licensee, the FPA stated.
“Today’s change of tack by the Government is a welcome approach. It shows our repeated efforts on behalf of Australian consumers and professional financial planners have not gone unheard,” said CEO Mark Rantall. “The FPA still calls for the removal of the ability to reintroduce superannuation and investment commissions on general advice altogether.”
The FPA also reaffirmed its support for select FoFA amendments introduced yesterday, which included the removal of the opt-in requirement, the retrospective application of FDS requirement, the ‘catch all’ provision of the best interest duty, and the facilitation of scaled advice.
Rantall said Australians will start seeing greater clarity in their choice between receiving professional financial advice free from conflicted remuneration, and buying a product from a salaried employee of a financial licensee.
“The argument for enshrining the term ‘financial planner’ under law also grows stronger as the true separation from advice and product continues apace,” he said.
Parliamentary secretary to the treasurer Steven Ciobo said despite “scaremongering by the opposition”, the FoFA changes would not affect consumer protection laws, 9 News National
The legislation will be debated next week, although the changes may not clear the Senate before June 30 because of the opposition by Labor and the Greens.