FOFA amendment changes extra levers to prosecute advice disputes
The changes to the Future of Financial Advice (FOFA) amendments struck between the Federal Government and Palmer United Party (PUP) will act as further levers against a planner in the event there is a dispute with a client.
Centrepoint Alliance audits and regulatory compliance manager Charlie Huang said the changes to the amendments agreed between the Federal Government and PUP to defeat a disallowance motion brought by the Federal Opposition appeared to be mainly administrative but could easily be used against planners by clients, litigators and regulators.
Huang, speaking at the Associated Advisory Practices conference last week, said the addition of statements indicating that an adviser has acted in the client's best interest and has prioritised their interests ahead of the advisers were more than just confirmation of the intent or extent of FOFA legislation.
He said that further statements, including that all fees were disclosed, a 14 day cooling off period was in place and that any changes to instructions were to be signed off by the client and adviser were binding and could be used against a planner in a dispute.
"You may feel these are just a few additional lines that have to be added to a statement of advice (SOA) but they become a few more levels the Australian Securities and Investments Commission, clients and litigators can pull when things go wrong," Huang said.
"FOFA compliance is all about the documents and statements that a planner makes to a client and you have to specifically put these statements in an SOA. However if you act contrary to these statements you can be up for misleading or deceptive conduct, for making false and misleading statements and various breaches of the Corporations Act."
"These are not areas in which you can pay lip service, you will be required to do what you say."
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
