FOFA - the devil will be in the detail
Until the final wording of the Future of Financial Advice legislation is released, it is impossible to assess what the opt-in agreements have actually achieved for financial planners.
When the Australian Democrats held the balance of power in the Senate during some of the years of the Hawke/Keating Government, it was common for the party representatives not to sign off on supporting policy changes until they had viewed and agreed the actual wording of the legislation.
They adopted this attitude in the knowledge that precisely-worded legislation cannot be significantly altered via regulatory interpretation.
This seems not to have happened with respect to whatever agreements were reached around how signing up to approved codes of conduct will “obviate” the need for planners to adhere to the two-year opt-in arrangements contained in the Government’s Future of Financial Advice legislation.
Little wonder, then, that a recent address by Australian Securities and Investments Commission (ASIC) commissioner Peter Kell has left many in the financial planning community wondering what, precisely, was achieved via the deals which secured passage of the legislation through the House of Representatives.
Addressing a joint Financial Services Council/Association of Financial Advisers forum, Kell implied that approved codes of conduct might prove to be just as onerous with respect to opt-in as the opt-in provisions themselves.
This is precisely what Kell said: “As for ‘obviating the need’ for opt-in, there is obviously still work to be undertaken around this issue.
"However, I’m sure it will not come as a surprise to hear that at this early stage our view is that obviating the need for opt-in via subscribing to a code does not mean that financial advisers will suddenly have no responsibilities and obligations in this area.
“We expect that codes will contain provisions that require members to have active obligations towards their clients that will achieve the same outcome as the opt-in requirement intends to achieve.
“As I’ve noted, ASIC intends to consult further on what those responsibilities and requirements on code members will be, and our expectations as to what actions will ‘obviate the need’ for opt-in.”
It is also revealing that the Opposition spokesman on Financial Services, Senator Mathias Cormann, maintains that irrespective of the shape and form of the codes of conduct, a Coalition Government would still feel the need to repeal the opt-in provisions.
Interviewed on the matter last week, Cormann made it abundantly clear he believed planners were unlikely to achieve the outcome many thought had been negotiated just before the legislation was passed in the House of Representatives.
The proof of the pudding will, of course, be in the eating. Precisely what financial planners will need to digest will be made clear when ASIC ultimately decides what needs to be contained in codes of conduct to therefore “obviate” the need for planners to adhere to the two-year opt-in requirements.
Perhaps then, they will have something in writing.
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