Industry welcomes FOFA amendments
Several financial services industry bodies have thrown their support behind the amendments to the Future of Financial Advice (FOFA) legislation tabled in Parliament yesterday.
The Financial Services Council (FSC) said the Government fulfilled its mandate to make advice more accessible and affordable for Australians while maintaining consumer protections.
"Technical amendments in the legislation will now allow consumers to get the advice they can afford and want," said FSC chief executive John Brogden.
"It also brings clarity and certainty to the advice community, particularly in relation to scalable advice and the best interest duty."
Much of the support was thrown behind the amendments to the best interests duty, with the FSC pointing to new legal advice it had obtained which states the amendments would not reduce consumer protection.
Similarly, the SMSF Professionals' Association of Australia (SPAA) has supported the changes to the best interests duty, stating the existing legislation had the potential to be too broad in its application, which could create uncertainty and cause a high compliance burden for financial planners.
"SPAA does not agree with the criticism that the changes to the best interests duty have inherently weakened how it works," SPAA chief executive officer Andrea Slattery said.
"In our opinion, the general requirement to act in the best interests of the client in relation to advice still remains."
However, both SPAA and the Financial Planning Association (FPA) have expressed concerns about exempting general advice from the ban on conflicted remuneration, despite the Government tightening the exemption after consulting with the industry.
"We believe the best consumer outcomes are achieved independently from links with product remuneration that can incentivise the sale of products over the provision of objective, quality advice in the genuine interest of the client," Slattery added.
While it said the changes tightening the preconditions under which conflicted remuneration could be paid were welcomed, the FPA still called for the removal of the ability to reintroduce superannuation and investment commissions on general advice altogether.
"This change, however, does draw a firm line between the polar opposites of product sales and appropriate financial advice," said FPA chief executive officer Mark Rantall.
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