ISA warns of return of conflicted advice
Industry Super Australia (ISA) has expressed concerns that changes to the Future of Financial Advice (FOFA) legislation would bring conflicted remuneration back to financial advice.
ISA chief executive David Whiteley called for the Government to carefully measure the impact of the changes on consumers to ensure there are no negative unintended consequences.
The Government has prepared an options-stage Regulatory Impact Statement (RIS) for the amendments, which details the effect of FOFA on both industry and consumers.
In it, the Treasury notes consumer groups were unlikely to support the proposed package of amendments, as they believe that any changes to FOFA will compromise consumer protections.
"Despite these concerns, many of the measures which were originally introduced by FOFA will remain, including an amended best interests duty and the ban on conflicted remuneration," the RIS stated.
However, Whiteley pointed to what the ISA called "uncontested research" from Rice Warner in 2013, which found that the previous Government's FOFA laws would halve the average cost of financial advice, double the provision of advice around the country, and boost Australians' private savings by $144 billion in the next 15 years.
ISA also pointed to a recent Newspoll survey, which found that 90 per cent of people agreed there should be laws to require financial planners and advisers to only provide advice or make investments that are in the best interests of their clients.
"ISA is concerned that these proposed changes will re-permit the payment of conflicted remuneration and re-open the debate about whether a financial planner is an impartial adviser or a sales rep," Whiteley said.
"Australians want impartial financial advice that is in their best interests and not tainted by a sales commissions, ongoing advice fees, volume rebates or other types of incentives paid to financial planners by banks and other institutions."
ISA, which represents industry superannuation funds, has urged the current Government to "fully assess the impact on consumers" of any proposed changes as part of the due diligence.
The Government stressed that the information gathered through consultations would be used to refine the RIS into a final details-stage RIS, which will be completed prior to the finalisation of legislation.
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