PJC falls short on FoFA recommendations
The Financial Planning Association (FPA) has announced its disappointment with the recommendations outlined in the Parliamentary Joint Committee (PJC) report on FoFA, recently tabled to the House of Representatives.
Mark Rantall, CEO of the FPA said:
“The original intent of FoFA was to improve transparency of, and access to, financial advice for all Australians. This is an effort that the FPA has consistently supported throughout all discussions with government and, whilst we have welcomed the opportunities to present our recommendations on behalf of our members and consumers, we believe the PJC has missed an opportunity to recommend improvements that would deliver on the consumer protections and benefits that FoFA was originally intended.”
“The FPA is disappointed with the overall recommendations outlined in the PJC‟s report on FoFA. Whilst the report acknowledged some of the concerns raised by the FPA, the majority of the suggestions the FPA made throughout the inquiry, and indeed recommendations made by other representatives of the financial planning industry, have not been adopted.”
Recommendations put forward by the FPA which weren‟t adopted in the final PJC report include:
- The removal of Opt-In renewal requirement
- The annual fee disclosure statement requirement to be removed and/or amended to only apply to new clients
- A request for an amendment to the Best Interest duty, in particular section 961B(2)(g)
- Amend the definition of „group life‟ within superannuation to allow for commissions to be payable on individually advised insurance cover
- A 1-year transition and implementation timeframe of the FOFA reforms similar to those applied for FSR
- The need for an independent regulatory impact statement on the reforms to industry and consumers.
“The FPA will continue to advocate, with government and the independents, the removal of the Opt-In requirement for the benefit of all Australians. We believe the Opt-In requirement could put at risk consumers ability to access a critical response during crisis situations and market uncertainty such as all Australians are faced with now.
The FPA has both welcomed and led the way in introducing a ‘best interest duty’ and the banning of commissions on investments in Australia. Taken together, these render the Opt-In policy redundant and exposes consumers to unnecessary risk,” said Mr Rantall.
“Notwithstanding the limitations of the PJC report, the FPA will continue to raise professional standards on the journey that we embarked upon well before the FoFA reforms were initiated in 2010. The year prior, we approved a new remuneration policy to remove investment commissions and improve client disclosure which will come into effect on 1 July 2012. And also since this time, the number one principle in the FPA Code of Professional Practice requires members to place the interests of their clients ahead of their own; and FPA practitioner members all work to higher professional standards than required by law.”