What will FPA say on FOFA?

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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:
  • 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.

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Planners move as grandfathering clears up
  • Don Dwyer AFP on 3/02/2014 1:12:40 PM

    As a member of the FPA for many years and as a principal of a financial practice I have received commisions from fund managers .At all times I and my colleagues have always acted in the best interest of the clients which is probably why we have a longterm successful business.I didnt need an industry fund/union /labour led FOFA to explain ethics and integrity to me .Perhaps the industry funds could try some transparency with the hidden fund costs which are not declared to members,the appointment of trustees who are ex labour politicians or union officials with no experience in superannuation or as trustees.I also find it very hard to understand how "intrafund advice" can possibly satisfy the "know your client" or "best interest " guidelines espoused by the FPA and FOFA.The FPA would be better served looking after the interest of members as opposed to trying to become a sub-branch of Industry Funds .Dante De Gori as GM for conduct and policy could usefully use his time looking at bad behaviour in the industry funds and not denigrating the members who employ him.

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