Both the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) will maintain their rage against the two-year opt-in contained in the Government’s draft Future of Financial Advice (FOFA) legislation, but the FPA believes it has negotiated some worthwhile concessions.
The chief executive of the FPA, Mark Rantall, said his organisation welcomed the fact the draft legislation had adopted the detail of a number of issues strongly advocated by the FPA – particularly new clients being the test for the opt-in trigger, a reduction to penalties for future potential breaches for opt-in, and flexibility in the way it was actually applied.
However, AFA chief executive Richard Klipin maintained his organisation’s hard-line approach, saying the legislation failed two crucial tests with respect to access and transparency with its acceptance of a two-year opt-in based on the fallacy of figures generated by research commissioned by the Industry Super Network (ISN).
"We are flabbergasted that the Government could simply adopt those figures without revealing where they came from and the circumstances under which they were generated," he said.
For their part, the industry superannuation funds – represented by both the Australian Institute of Superannuation Trustees (AIST) and the ISN – welcomed the draft legislation as protecting consumers.
ISN chief executive David Whitely described it as a "moderate package" that would protect Australians’ super savings by imposing a new obligation for financial planners to act in clients’ best interests, and by prohibiting conflicted remuneration including commissions from group insurance and MySuper products.
AIST chief executive Fiona Reynolds said the measures contained in the draft legislation "signalled a new era of affordable and quality advice for super fund members, and would also ensure that the new MySuper products from 1 July 2013 would be commission-free".
"For too long, super fund members have been paying for advice that hasn’t always been in their best interests," she said.
"Importantly, these reforms are not about killing off advice; they are about ensuring that super funds members have access to affordable and quality advice and, doing so, should boost retirement savings," Reynolds said.
MLC & NAB Wealth Group executive Steve Tucker welcomed the Government’s announcement as providing clarification on a number of its FOFA reforms.
"We believe these reforms will achieve the Government’s objective of building confidence and trust in financial advice," he said. "The number of people seeking advice has been stagnant at around 20 to 25 per cent for many years now, and for the future growth of this industry we had to face into the issues that were holding the industry back."
