The Future of Financial Advice (FOFA) rules need to be extended to general advice, according to the Finance Sector Union (FSU).
The FSU’s national industrial officer, Alicia Clancy has told the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial sector, that she believes an extension of FOFA into the general advice arena of the major banks is warranted.
“I think the first thing we need to really look at is an extension of FOFA,” she said. “FOFA went to wealth, it put customers first—the best-interest test—but never to any general advice.”
“With insurance products, credit cards and all those sorts of things, if there is a best-interest test at a general advice level then there is a stronger push up the chain that the product has to pass a test,” Clancy told a public hearing of the committee.
“That is one of the elements we can look at—the need to pass a customer best-interest test. I think one of the harder elements is to determine a line that is, what is a bad product?”
“A process we have undergone over the last 12 months has seen the industry struggle with the concept of a bad customer outcome and [the industry] has been really loath to put a label on what a bad customer outcome is,” Clancy said.