Responding to the amendments to the Future of Financial Advice (FoFA) legislation tabled in Parliament today, John Brogden, CEO of the Financial Services Council, said the Bill failed to provide certainty for consumers and financial advisers and therefore the Council will not support it.
Mr Brogden said the Government had walked away from the centrepiece of its reforms by dropping the requirement for advisers to adhere to the opt-in reform.
“Our concern is that the legislation leaves it to ASIC to administer opt-in without any certainty as to what they require to provide an exemption and what the professional standards will be,” Mr Brogden said.
“Under a last minute deal between the Financial Planning Association and Industry Super Network, the Government has dropped the requirement for opt-in but will not give any certainty to consumers and advisers on the operation of the Best Interest Duty and scaleable advice,” Mr Brogden added.
“The Council has always supported the ban on commissions for superannuation and investments and the requirement for advisers to act in the best interest of their client. While we strongly support a Best Interest Duty, we are concerned the legislation does not clearly articulate how this particular duty applies, nor does it give the regulator a clear and objective measure to test whether a financial adviser has acted in the best interest of their client.
“Our fear is the lack of clarity around the Best Interest Duty will expose financial advisers to significant risk and see many disputes end up in court.
“We are also disappointed the legislation does not provide legal certainty for the provision of scaleable advice. This is a terrible outcome for consumers as no reputable financial services provider will be able to offer scalable advice.
“The members of the Financial Services Council represent 90 per cent of Australia’s financial advisers and we do not support legislation that fails to provide certainty for consumers and the industry and will not make financial advice more accessible and affordable. It is not yet clear whether the consumers’ organisation Choice will support legislation to drop opt-in.”
