The Association of Financial Advisers (AFA) says general advice amendments have no bearing on the activities of financial advisers who provide personal advice and have established relationships with their clients.
The AFA dismissed recent reports that the general advice exemption proposed under the Future of Financial Advice (FOFA) amendments will mean conflicted remuneration will be paid to financial advisers.
The general advice amendments were drafted to help banks and call centres, which provide general advice services, it said.
“The interpretation of the FOFA amendments relating to general advice has been reported as meaning that financial advisers will provide general advice in order to be able to receive conflicted remuneration,” AFA CEO Brad Fox said.
“These claims are a misinterpretation of the purpose of the draft FOFA amendments.
“Unfortunately these recent reports on the general advice exemption could be interpreted to mean that financial advisers are seeking to exploit the FOFA amendments and continue to use conflicted remuneration models,” Fox said.
The exemption for general advice was part of the Coalition’s policy position on FOFA and goes back to its dissenting report to the Parliamentary Joint Committee inquiry into FOFA in February 2012.
The AFA said financial advisers should not be providing general advice for many reasons, including that it is not possible for an adviser to claim their advice is general for an existing client where an adviser is well versed with their personal circumstances.
Also, product providers who do not know what sort of advice clients are getting will not simply agree to pay commission to financial advisers for general advice.
They would be violating conflicted remuneration rules if the advice was personal.
