ISA: Clients' best interests not top priority

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Industry Super Australia may help put a spanner in the works of FOFA reforms, with strident condemnations on the financial planning industry’s “extraordinary and unseemly scramble” to backtrack on the Labor-introduced legislation.

The industry super lobby group’s CEO David Whiteley spoke at the Financial Advice in Super Symposium in Melbourne – hosted by ISA on Friday – saying the proposed amendments to FOFA were “overreach” and would result in the country being worse off than before the legislation was passed.

He stressed clients’ best interests will no longer be top priority if the amendments are passed and was unhappy that commissions – which ISA have long advocated against – may be brought back in, along with conflicts of interest.

ISA chair and former NSW Liberal leader Peter Collins also spoke, calling for the proposed changes to be debated in Parliament as legislation – currently some of the changes are being treated as regulation and does not have to go through the House to come into action.  

The ISA has the ear of mainstream media and the public. But the industry super body’s stance conflicts with other financial service representative groups, such as the Association of Financial Advisers and Financial Planning Association – although the FPA has said it does not support commissions being brought back in.

Yesterday AFA CEO Brad Fox called on financial advisers to get involved in a “grassroots campaign” to fully explain – to federal elected representatives in the lower house and the Senate – the implications of FOFA amendments on advisers and clients.

“Some reports in the mass media are scare-mongering about consumer protections being stripped. That is not the case at all. I think there’s been some carelessness in reporting, and I think it’s important to have a balanced view out there,” he told Wealth Professional.
“With the FOFA amendments we will still have the most regulated financial advice framework in the world including a legislated best interests duty that is well defined, understood and enforceable.”

Fox stressed the importance of advisers getting their voice heard if they care about the impact of FOFA – especially the possibility the amendments will not get passed.

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