The Financial Planning Association’s top two issues with the proposed FOFA changes centre around fee disclosure statements and conflicted remuneration.
The FPA is thoroughly examining the Liberal government’s proposed changes this week and its Policy and Regulations Committee – made up of around 10 FPA members – will meet next Friday to discuss and form the submission, policy and conduct general manager Dante de Gori told Wealth Professional.
Assistant Treasurer Arthur Sinodinos announced on Wednesday the government’s consultation process is now open for three weeks, with submissions closing on 19 February.
FPA supports the government’s intention to clear up unworkable elements of FOFA but does not want to “see the return of bad behaviour”, de Gori said.
“Our main concern is to make sure the changes deliver efficient, effective and practical FOFA legislation which can allow advisers to make advice more affordable and accessible, while giving protection to consumers.”
There are issues with red tape limiting efficiency with the best interests duty and conflicted remuneration, and this is what FPA’s submission will focus on, de Gori said.
The government has delivered on its promise to make the fee disclosure statement apply only to prospective clients after 1 July 2013.
“But the feedback we’ve had from members is it’s hard to meet the 30 day rule and identify anniversary dates, so the rule needs to be structured so advisers can send fee disclosure statements out in bulk.”
But one thing FPA will not support is the return of commissions on general advice, “in any shape or form”, de Gori said.
“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.”
De Gori pointed to negative comments in the press about a perceived watering down of FOFA.
“But the reality for around 10,000 FPA members is that they have signed a code of conduct which doesn’t change. That code is always going to be higher than the law.”
The draft amendments put forward by Sinodinos will:
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- Remove the opt-in requirement;
- Amend the fee disclosure regime to operate only prospectively;
- Remove section 961B(2)(g) (the ‘catch-all’ provision) from the best interests duty;
- Specifically provide for scaled advice;
- Exempt general advice from conflicted remuneration; and
- Fix the grandfathering provisions to allow financial planners to move between licensees while retaining access to grandfathered benefits.