Cormann in disbelief over alleged FOFA deal
The Federal Opposition has expressed disbelief that the Financial Planning Association (FPA) might have entered into an agreement with the Industry Super Network (ISN) involving trade-offs around the acceptance of opt-in in return for the Government legislating to restrict the use of the term 'financial planner'.
The Opposition spokesman on Financial Services, Senator Mathias Cormann has told Money Management he would be very surprised if the FPA ever supported opt-in in circumstances where it, the Association of Financial Advisers (AFA) and the Financial Services Council (FSC) have all been very supportive of the 16 Coalition amendments to improve the FOFA bills.
"That includes our strong and unequivocal recommendation that opt-in be rescinded," he said.
FPA chief executive Mark Rantall yesterday denied his association had changed its views on opt-in, but said the FPA was continuing to negotiate in the best interests of its members.
Senator Cormann urged financial services organisations to hold the line on opt-in, pointing out that the opt-in concept had been the brainchild of ISN.
Money Management yesterday obtained a document purporting to be a "FPA and ISN joint position on FOFA", within which the two organisations appeared to agree on "a joint approach to future regulation of a best interests test and ongoing charging by advisers, and disclosure of advice fees".
The document stated the following: "It is proposed to present their joint position to Government.
- (a) Joint FPA/ISN support for biennial 'opt-in' for a period of at least four years from the commencement date and applying to new clients only.
- (b) The support for opt-in (a) is conditional on (c) & (d) being met.
- (c) That the Government agree to present and table legislation in Parliament by 1 July 2013 that will:
- (i) enshrine the term "financial planner" in law; and
- (ii) require financial planners to sign up to an approved code of professional practice which explicitly requires financial planners to provide ongoing financial planning services where an ongoing fee is paid; and
- (iii) the proposed law will adopt the recommendations of the Advisory Panel on Standards and Ethics made in November 2011 creating the obligation for all providers to subscribe to, and licensees to participate in, an approved Code;
- (d) The government must actively facilitate the introduction of this legislation, and ASIC (Australian Securities and Investments Commission) must actively progress the operationalising of the legislation to market application, and the professional community must develop appropriate standards solutions, within the four years of the opt-in period.
- (e) Licensees and professional communities that have advanced their application of these processes, and have put in place appropriate professional regulatory management practices to obviate the need for legislative opt-in requirements, as independently assessed by ASIC, will be able to receive class order relief from the provisions of the opt-in requirements.
For clarification - The parties acknowledge that those providers who do not satisfy the requirements under (e) or who do not meet the requirements of future legislation developed in accordance with (c) continue to be subject to opt-in requirements under FOFA."
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