The Financial Planning Association of Australia (FPA) has welcomed the Government’s amended restrictions to the general advice exemption under FoFA. The FPA said it has consistently and clearly raised the issue of potential consumer risks – through its submissions to Government and in the public arena – particularly highlighting the general advice exemption and conflicted remuneration issues.
“Today’s change of tack by the Government is a welcome approach” said FPA CEO Mark Rantall. He said the FPA welcomed the “11th hour amended form of the general advice component. It essentially restricts the receipt of conflicted remuneration to employees only of a financial services licensee”. While this policy shift tightens the pre-conditions under which conflicted remuneration can be paid and is welcomed, Mr Rantall said the FPA still calls for the removal of the ability to reintroduce superannuation and investment commissions on General Advice altogether.
The FPA also reaffirmed its support for select FoFA amendments introduced today to reduce red tape and facilitate higher standards of advice to all Australians. These include the removal of the opt-in requirement; the retrospective application of FDS requirement; the “catch all” provision of the Best Interest Duty and the facilitation of scaled advice. Each is a pragmatic and positive outcome for financial planners without consumer detriment, Mr Rantall said. (Source: FPA release, 19 March 2014.)
SPAA welcomes best interests duty amendments
The SMSF Professionals’ Association of Australia (SPAA) has given the “thumbs up” to the amendments to the best interests duty for financial advisers proposed in the FoFA streamlining Bill (see above). SPAA CEO Andrea Slattery said the existing legislation created uncertainty and had the potential to be too broad in its application. According to SPAA, removing the “catch-all” provision for best interests duty will increase certainty and reduce the compliance burden for advisers. Mrs Slattery rejected criticism that removing the “catch-all” provision would weaken the best interests duty. Rather, SPAA noted that advisers are still subject to a general requirement to act in the best interests of their client.
However, SPAA expressed concern that the proposed exemption from the ban on conflicted remuneration for general advice was still “too generous”. While the amendments would help to increase the availability of general advice, SPAA argues that any advice should not be influenced by commissions. SPAA also stressed that the FoFA reforms do not address the competencies of financial advisers, which are integral to improving the quality of financial advice, Mrs Slattery said. (Source: SPAA media release, 19 March 2014)
[LTN 53, 19/3/14]