FOFA increases compliance burden
The compliance work involved in running an Australian Financial Services License (AFSL) has intensified under the Future of Financial Advice (FOFA) reforms, a head of wealth management believes.
General manager of finance and wealth management at Ausingroup Mark Morcos said FOFA has missed its goal of making advice more affordable.
He added calculating how much one needs to allocate towards compliance in a smaller practice has become harder, and the resource requirements have increased.
"What it's done is push the cost of advice up, especially from a smaller practice point of view, and that has to be reflected in what we charge the client," he said.
"That ultimately means the client that needs the advice won't be able to afford it."
As for conflicted remuneration, Morcos believes it should not make a difference to practices that were running their licenses properly.
"If you were running a practice properly even before FOFA came in, you would've basically told your client and disclosed any conflicted remuneration.
"If they were running a best practice model they would have a conflict of interest register and so on, and disclosed anything that they would be earning to clients even before FOFA."
Recommended for you
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
The central bank has announced its latest rate decision amid stubborn inflation and increasing geopolitical tension.
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
