Senator Cormann on Mon 24.3.2014, confirmed the Government remained committed to implementing its proposed FoFA changes “as soon as possible” noting the legislation before the House of Reps “will continue through the normal parliamentary process”.
Senator Cormann also announced the implementation of the FoFA Regulations will be paused. “Now that the legislation has been referred to the Senate Economics Committee and to enable the Government to consult in good faith with all relevant stakeholders on the Future of Financial Advice Regulations, I have decided to pause implementation of these Regulations during that consultation,” he said.
Senator Cormann also confirmed the Government was committed to the retention of the best interest duty and that it did not intend to reintroduce conflicted remuneration or sales commissions for financial advisers. (Source: Minister for Finance’s media release MC 16/14, 24 March 2014.)
[ASIC has previously advised that it would not take enforcement action in relation to the specific FoFA provisions that the Government was planning to repeal. ASIC has yet to indicate if it will update its advice in light of this latest announcement by Senator Cormann.]
FoFA “pause” and further consultation welcomed
The announcement by Senator Cormann has been broadly welcomed by industry. Below are some select comments from various stakeholders:
- ICAA – The Institute of Chartered Accountants Australia (ICAA) said it would continue to discuss measures related to opt-in and fee disclosure with the government during this period of consultation. ICAA Head of Leadership and Advocacy Rob Ward said the announcement is a step towards implementing the right protection for consumers’ best interests. (Source: ICAA media release, 24 March 2014.)
- CPA Australia – “We’ve always said that cutting the acres of red tape hampering our national productivity and competitiveness is important, but it ought not be at the expense of the best interests of consumers,” said CPA Australia CEO Alex Malley. “We believe that the changes the Government is seeking to make to FoFA tip the balance too far the wrong way and erode important and hard won consumer protections,” said Mr Malley. (Source: CPA Australia media release, 24 March 2014.)
- Financial Planning Association– Financial Planning Association of Australia (FPA) CEO Mark Rantall said the Government’s “good faith” decision to place on hold the introduction of regulatory amendments to FoFA legislation was a “welcome initiative”. (Source: FPA media release, 24 March 2014.)
- Financial Services Council – The Financial Services Council (FSC) said the Government’s decision to pause changes to the FoFA regulations was “prudent and sensible”. FSC CEO John Brogden said “there has been a lot of white noise and misinformation on what the proposed FoFA refinements mean for consumers”. (Source: FSC media release, 24 March 2014
[LTN 57, 25/3/14]