Extend FOFA remuneration bans says AFA
The Future of Financial Advice (FOFA) ban on conflicted remuneration needs to be extended beyond financial advisers to cover property spruikers, accountants and others, according to the Association of Financial Advisers (AFA).
The AFA has used its submission to the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial services sector, to argue that many important consumer protection issues could theoretically be addressed by the FOFA laws ban on financial product issuers being able to offer conflicted remuneration being extended.
The AFA submission noted that no retail investment product providers in the market offered commissions to financial advisers for new accounts and many were "gradually – where legally supported to – turning off legacy / trailing commissions".
"But this is only one sector of the distribution market – financial advisers (and with limited licensee accountants who recommend products as well)," it said
"Property spruikers are not captured by the ban on conflicted remuneration; accountants who ‘act under the client’s instruction’ are also excluded; wholesale client advisers and whole product providers are not captured by the same rules that apply to the majority of financial advisers and accountants," the AFA submission said.
"At the centre of the issue is that the ban on conflicted remuneration does not extend to wholesale clients, which particularly exposes older Australians to operators who engage in wholesale investor schemes,” it said.
The AFA submission pointed to shortcomings in the Corporations Act which meant particular sections of the financial services industry were not being captured by the FOFA arrangements and argued they should be closed.
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