Brad Fox

The Association of Financial Advisers (AFA) has welcomed the release of the finalised Grandfathering regulation and the passing of the Tax Agent Services Act (TASA) amendments in the Senate.

Brad Fox, Chief Executive Officer of the AFA, said although finalisation of the Grandfathering regulation has been a long time coming, the outcome is appropriate. “The industry now has another 12 months to prepare for the full implementation of some of the critical elements of the conflicted remuneration obligations,” Mr Fox said.

Grandfathering for platforms was omitted from the original Future of Financial Advice (FoFA) Bill. This omission was corrected via regulation in September 2012.

“A draft regulation, changing the impact of Grandfathering, was released in March 2013, however this was not finalised until the very last minute,” he said. “The finalised regulation contains some additional elements that were not in the draft, including grandfathering for employee arrangements.”

Mr Fox said the additional clarity on the Grandfathering of employee remuneration arrangements for both salaried licensees and salaried advisers within an Authorised Representative business is welcome.

“In the absence of this regulation, the implications of changing employee remuneration arrangements were most concerning,” Mr Fox said. “The cost impact of these changes is significant, so adequate time for implementation is particularly important.”

Mr Fox also said that the finalisation of the TASA amendments in the Senate on Friday is also a step in the right direction.  “The delay in the commencement of the TASA for financial advisers to a 1 July 2014 start date is a sensible outcome, particularly given the industry’s huge commitment to becoming FoFA compliant.”

Without the passing of the legislation, Mr Fox said the industry faced a fundamental legislative problem from 1 July.  “Fortunately the passing of this legislation in the Senate has alleviated this complication,” he said.  “With FoFA and MySuper starting yesterday and TASA now on the horizon, the financial advice industry faces a very challenging time.”

Mr Fox said the AFA is working towards helping advisers with the implementation of FoFA changes.

“Advisers are doing everything they can to implement these changes and we really need to support them,” he said. “Gaining some clarity around these issues has been beneficial to the industry as a whole.

The AFA’s Chief Operating Officer (COO), Phil Anderson, will share the AFA’s insights into the implications of this regulation for advisers during the AFA’s National Road Show this month.

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