Learning from the lessons of similar reform in the United Kingdom, the Australian financial advisers need to ensure adequate standards and controls are in place ahead of the Future of Financial Advice (FOFA) July 1 implementation date.
Richard Mason, director of finance for global risk and consulting firm Protiviti, said the UK system has demonstrated that designating a senior staff member to implement changes ensures consistency and level of liability in meeting the new standards.
"Firm need to demonstrate that senior management and executive bodies are fully engaged," he said.
Mason said audit trails will also play a significant role in the implementation of legislative changes, including the reasoning behind decision taken around FOFA.
Control functions need to be in place at the early stages and key points throughout the implementation of the FOFA measures.
This includes ensuring risk and compliance teams provide advice on the standards and approaches to be taken, Protiviti managing director Gary Anderson said.
In addition, advisers should be able to adequately explain the cost of advice to clients and ensure that the firm's business model and strategy are aligned to the new revenue expectations.
For the adequate provision of scaled advice services, practices need to ensure there are strong internal control systems so that advice standards are being met by advisers.
"While the Australian industry has a transition period of 12 months to comply with the reforms, those that take steps now to ensure they can demonstrate compliance with the 'best interests' test will be ahead of the game," Mason said.
