Brad Fox
The Association of Financial Advisers (AFA) yesterday presented to the Senate Economics Legislation Committee on the FoFA Amendments and expressed the need for the Amendments to be supported.
Attended by AFA CEO Brad Fox and National President Michael Nowak, the AFA spoke in support of their submission to the committee made 30 April 2014.
In the opening statement made by Mr Fox, the AFA acknowledged that they are broadly supportive of the reform process that has spanned the last five years, and went on to highlight that the true value of personal financial advice had been forgotten in the debate over the amendments.
Mr Fox said at its core, great financial advice is about people and their emotions.
“It’s about advising the nurse who has grown physically tired and mentally weary of caring for patients and is desperate to know when she can retire. It’s about advising the mother left to raise two young kids after losing her husband to cancer. It’s about advising the factory manager facing unemployment from the closure of his plant who is wondering how he will meet the mortgage payments and put food on the table for his family. It’s advising a family facing the heart breaking decision to move an aging parent into a care facility.
“Every day, Australians are facing life defining moments that require financial decision making and every day they turn to financial advisers to support them through these challenges,” he said.
Commenting on the hearing, Mr Fox said, “We were very pleased to have the opportunity to present on behalf of our members, and that together with the details in our submission, we have informed the legislators of the settings that we believe are appropriate to both protect consumers and enable the advice profession to meet Australia’s advice needs.”
In relation to the General Advice Exemption, the AFA made it clear that it does not support personal financial advisers accessing this exemption. “We see this applying to non-financial adviser staff providing general advice only on their employer’s products – typically in a bank setting. The exemption may need some fine-tuning but the intent is that this is not a return to commissions for advisers.”
The AFA also supported a resolution to Grandfathering citing competition and market competitiveness as having been restricted. The AFA also went to lengths to present some of the grandfathering issues being faced from a client perspective. “We think the debate has overlooked a number of common situations that could be detrimental to clients because of grandfathering restrictions,” Mr Fox said. “We need to see them resolved and this should be of highest priority.
The hearing gave the AFA the opportunity to demonstrate their relevance in representing the financial advice market through answers to questions from the committee.
“The AFA has numerous partner relationships with licensees that authorise around 50% of the advisers in Australia. Through regular forums with these groups the AFA is able to understand the effects and implications of each regulatory change on the provision of advice and use this knowledge to support the development of appropriate policy positions,” he said. “The relationships also provide a forum for the AFA to demonstrate leadership to these licensees and their advisers, particularly around growing professionalism in financial advice.”
Mr Fox said financial advice is still a relatively young, developing profession. “We are well on a journey to becoming a recognised profession but we are not there yet. The culture around advice is changing, and it’s changing quickly, so the interaction we have with licensee leaders and advisers is critical to encouraging this journey to continue.”
The AFA also pointed out that the majority of their members own or work in privately owned small businesses and they need the certainty that will be achieved by the amendments proceeding. “All business thrives in an environment of certainty and we look forward to the committee’s report in mid June, and the governments final position being released soon thereafter, hopefully with sufficient support to see legislation and regulations finalised early in the new financial year.”