The financial services sector has welcomed the passage of the Corporations Amendment – including enshrinement of the terms ‘financial adviser’ and ‘financial planner’– through the House of Representatives.
The legislation has been reviewed and supported by the Parliamentary Joint Committee on Corporations and Financial Services, with the main opposition coming from accounting associations within Australia.
Robert Brown, fellow of the Institute of Chartered Accountants, expressed strong reservations about the Bill, saying that FoFA reforms were compromised. In particular, the use of commissions paid on individual life insurance policies and percentage-based asset fees on investment products. Brown said that the bill could have the unintended effect of misleading consumers as to the nature of advice they received:
“…consumers of financial services are likely to incorrectly conclude that by consulting what amounts to a ‘government endorsed’ licensed ‘financial planner’ or ‘financial adviser’ that they will be dealing with a professional person who can be relied upon to act in their interests without the improper influence of conflicted remuneration…”
The FPA has expressed their elation at the news, after advocating for the change for more than a decade. General manager of policy and standards, Dante De Gori says they have now passed the biggest hurdle and there is only one more step before the terms are enshrined in law.
He doesn't expect there will be any problem passing through the Senate, which could be any time between 17 and 27 June, but says there are no guarantees.
Brad Fox, AFA CEO, says the Bill is an important step in creating consumer understanding of the role and responsibilities of a licensed provider of financial advice. “It will help consumers identify a trained, qualified provider from any other individual purporting to have this expertise,” he says.
The AFA is pleased that the Bill has now passed the House of Representatives and will await the outcome from the Senate.
The Bill will also implement reforms that promote a deep and liquid corporate bond market, says the Minister for Financial Services and Superannuation, Bill Shorten, providing an alternative funding source for Australian companies and increase competitive pressure on lending rates to businesses.