FOFA regulatory changes nearly ready
The Federal Government expects to have its regulatory changes to the Future of Financial Advice (FOFA) legislation in place by the end of this month.
The Assistant Treasurer, Senator Arthur Sinodinos, confirmed the timetable in an address to an insurance industry event on Friday at the same time as reaffirming that the Government would not be distracted from the legislative changes it intends making to FOFA, including the best interests duty.
Further, Sinodinos made clear that he did not believe those legislative changes would undermine the best interest duty but, rather, provide greater certainty with respect to the provision of scaled advice.
He said the catch-all nature of the best interest duty with respect to scaled advice had resulted in significant legal uncertainty within the industry.
"Many have argued that the catch-all provision makes the safe harbour unworkable and removing this provision will restore confidence to industry," Sinodinos said.
He said that despite the amendments, the best interests duty would continue to provide a high degree of protection against poor quality advice, as advisers would be required to satisfy six provisions to prove that they have acted in their client's best interest.
"This is backed up by other relevant protections in the common law and in the Corporations Act," the minister said.
He said that, as well, the Government would amend FOFA to clarify the intent of the legislation to facilitate the provision of scaled advice.
"Our proposed amendments will leave no doubt in the minds of advisers that they can offer scaled advice, which will increase affordability and improve consumer access to the financial advice system," Sinodinos said.
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