AFA: speaks out on FOFA, industry funds and fees

Proposals to introduce harsh penalties on financial advisers, including fines of up to a million dollars and lifetime bans for breaches of new regulations, which are currently being considered by the Government, provide further evidence that the industry funds movement is attempting to drive the Government’s Future of Financial Advice (FOFA) policy, according to the Association of Financial Advisers (AFA).

“The union-backed industry superannuation funds are attempting to do what should be the Government’s work – that is, formulate policy, control legislation and police regulation,” said AFA CEO Richard Klipin.

“Evidence of the fact can be read daily in the finance press.”

Mr Klipin said union-backed industry funds and consumer advocate groups have been issuing regular “warnings” to the financial advice industry, via the finance press, that the FOFA reforms will become even more onerous if the advice community continues to contest them. The AFA has been lobbying the Opposition and Independent MPs in an effort to have proposals which are not in the consumer’s best interests changed.

“Clearly, the industry fund movement’s “warnings” tell us two things,” Mr Klipin said, “that members of the industry funds movement are trying to influence FOFA outcomes so that they can assume complete control of Australia’s superannuation savings; and that they are trying to silence our fundamental right to speak.”

Mr Klipin said the financial advice industry is now looking to the Government to see past the hysteria being stirred up by the industry funds and consumer advocate groups and provide independent modelling which proves FOFA reforms will result in better outcomes for consumers.

“This is what should be the fundamental focus of FOFA,” he said.
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Mr Klipin said that financial advice is a highly valued partnership between adviser and client.
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“As Back to Basics research revealed, financial advisers are the third most trusted profession amongst those consumers who receive advice, after doctors and dentists,” he said.
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“This is no accident: AFA advisers have a 65 year history in successfully helping everyday Australians build, manage and protect wealth.”
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Mr Klipin called for a level playing field for all who operate in the financial advice space.
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“At the moment it is not a level playing field. In the interests of fairness and equality, and in the interests of consumers, we are calling on the industry funds to step up.”
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Mr Klipin said that it is time for industry funds to come clean and disclose, in dollar terms, how much their anti-adviser propaganda campaign is costing members.
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“We also believe they should disclose and fully unbundle their fees so that their members understand what they’re paying for and what they’re getting in return and can “opt-in” or “opt-out” of services they don’t want and/or don’t get.”
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Mr Klipin said the AFA would not fall victim to industry fund attempts to silence the advice profession.
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“In the interests of our advisers and the clients they serve, the AFA will continue to raise its concerns about proposed reforms which we believe run counter to the best interests of consumers, including opt-in and the banning of commissions on insurance within superannuation,” he said.