FOFA amendments needed on scaled advice
Amendments are needed to the Government's Future of Financial Advice (FOFA) legislation to enable financial advisers to appropriately deliver scaled advice, according to the Association of Superannuation Funds of Australia (ASFA).
In a submission filed with the Parliamentary Joint Committee reviewing the FOFA bills, ASFA has called for amendments to the scaled advice provisions to allow clients and financial advisers to "jointly determine the subject matter of advice".
The submission said any such ability "should be subject to relevant warnings where the financial adviser identifies that the subject matter could potentially be broader than that which has been agreed and would be documented in the Statement of Advice".
The ASFA submission said members of the organisation had expressed concern about the manner in which the new legislation would work, and as a result, it had conducted testing of the various scenarios which had thrown up potential problems, particularly where the client sought single-issue financial advice, but the adviser became aware of other issues.
"Given the asymmetry of knowledge between the adviser and client, a balance will need to be struck between facilitating scaled advice and protecting the interests of the clients," the submission said.
"It appears as though the solution may be to permit the client and the adviser jointly to determine the nature of the advice to be given but not, for example, the products to be advised upon (other than in the context of intra-fund advice)."
It said that once the (scaled) subject matter of the financial advice had been determined, then the legislation should make it clear that it operated only to the extent of the agreed subject matter of the advice.
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