The Financial Planning Association (FPA) has released its submission to Treasury on the Government’s proposed changes to the Future of Financial Advice (FoFA) regime. Although the FPA was broadly supportive of the proposed changes, it identified some areas for improvement. FPA General Manager of Policy and Conduct, Danti De Gori, said the “overall aim of the FPA’s submission is to provide workable alternatives that will ensure the final legislation will assist financial planners in providing high quality, professional financial advice for the greater good of the Australian public”. He said “a good example is the pragmatic measures we have outlined to remove layers of red tape and provide greater certainty for scaled advice. Many of the draft FoFA changes are positive, however they also require careful management in order to avoid any unnecessary risk or detriment to consumers”.
Some of the FPA’s responses to key areas for change are as follows:
- Scaled advice: the FPA said it believes greater tightening is required for the appropriate delivery of scaled advice to avoid unintended consequences.
- Best Interests Duty: the FPA welcomed the removal of the “catch-all” provision of the best interests duty (s 961B(2)(g) of the Corporations Act).
- Conflicted Remuneration: the FPA says it has recommended stronger consumer protection mechanisms by way of removal of unnecessary proposed Corporations Law amendments and clearer guidelines pertaining to the treatment of general advice exemptions, while banning conflicted remuneration for complex financial products.
The submission (dated 19 February 2014) is available on the FPA website.
[LTN 37, 25/2/14]