The draft legislation, released today, follows extensive consultation with the financial planning industry and acknowledges the protection and certainty this will provide to the Australian public.
 
The FPA has led the pathway to professionalism in the financial planning industry and the protection of all Australians. In April 2011, the FPA originally called on the government to restrict the term “Financial Planner” under law.
 
Mark Rantall, CEO of the FPA said:
 
“This is a fundamental public confidence issue. Only 1 in 5 Australians currently get financial advice and some of this is due to consumers not knowing who to trust. Consumers deserve the right to differentiate between a qualified, professional financial planner and anyone who happens to hang out a shingle calling themselves a financial planner. The FPA has long called for ‘truth in labelling’ and this draft legislation from the government responds to those calls.”
 
Currently, under the Corporations Act 2001, there is no constraint on individuals calling themselves financial planners irrespective of their training, competence, and even licensing.
 
“Whilst FPA members hold some of the highest educational and ethical standards in the industry, there are those in the industry who call themselves financial planners but are seemingly unaware of the specific competency, training, licence, professional standing and services provided. This legislation should put a stop to those bad apples who have misled the Australian public and tarnished the profession by wrongly using this title.”
 
“This is a great win for consumers and strengthens the benefits of the FoFA reforms, in particular the introduction of Best Interest and the removal of conflicted remuneration,” said Rantall.
 
The draft legislation states that only those fully licensed and authorised to provide personal financial advice can call themselves a financial planner/adviser but did not propose that financial planners should be a member of a professional association, as per the original FPA proposal.
 
“Membership of a professional body, like the FPA, provides additional safeguards to consumers in terms of the professional integrity and accountability of their financial planner. Though, this is a significant first step the FPA will continue to advocate for membership of a professional body and/or an ASIC approved Code as the ultimate criteria for restricting the term financial planner/adviser.”

The FPA also welcomes the draft regulations released today to confirm the removal of the existing accountants’ exemption. The FPA has long advocated that in order to provide greater consumer protection then all providers who want to provide personal financial advice must be licensed.

Submissions for both papers close 21 December 2012. 

The papers can be accessed by clicking here.

The post Enshrinement of “financial planner” to provide greater consumer protection appeared first on AdviserVoice.

Minister Shorten released draft legislation this morning which restricts the use of the terms ‘financial adviser’ and ‘financial planner’.  The legislation will limit the use of these terms to people who have an Australian Financial Services Licence (AFSL) or who are authorised by someone who has an AFSL.

AFA CEO, Richard Klipin said enshrining the term financial adviser is a win for consumers and the professional advisers who serve them. It will help protect consumers from unlicensed advisers, who, under the new legislation, will be prohibited from using the term.

“This will go a long way towards protecting consumers from unlicensed operators who have until now been able to call themselves financial advisers,” Mr Klipin said. “Consumers will now know that the people they seek advice from are genuine financial advisers, who are licensed or authorised to provide financial product advice.”

AFA President, Michael Nowak, said the proposed legislation is a win for the industry.  “It is a particularly good outcome for the financial advice industry,” he said. “Advisers can now use the term ‘financial adviser’, confident in the knowledge that consumers will understand that they are licensed or authorised to provide financial product advice.”

The AFA’s Back to Basics research released in 2010 demonstrated that while people who are in an advice relationship are better off financially; happier, more engaged with their finances and have a feeling of certainty and control over their financial future, only around two in 10 currently get advice.

“This may have something to do with the fact that consumers don’t know who to trust when it comes to financial advice,” Mr Nowak said. “Enshrining the term financial adviser will help resolve that issue.”

Mr Klipin also acknowledged the consultative approach the Government had taken.

“What the industry now has is a very practical solution which will help raise the perception of the financial advice profession and help restore consumer confidence in financial advisers,” he said. “We look forward to working with the Government to finalise this legislation and to see it passed by the parliament into law.”

The post AFA Congratulates Minister Shorten on Consumer Protection appeared first on AdviserVoice.

“The Productivity Commission has backed down from the strong pro-competition, pro-choice and pro-transparency position they took in their interim report and appear to have given in to pressure from the Minister for Financial Services and Superannuation, Bill Shorten,” said AFA President, Brad Fox. “The Productivity Commission set the industry up with high expectations only to let everyone, especially Australian workers, down.”

In August, Minister Shorten publicly supported a submission to the Productivity Commission compiled by two of his own departments – Treasury and the Department of Education, Employment and Workplace Relations – which advocated for the continued involvement of an expert panel with Fair Work Australia (FWA).

“We are very concerned about the influences on superannuation policy and we question, as we have previously, the appropriateness of FWA making decisions with respect to the selection of superannuation funds in modern awards,” Mr Fox said.  “FWA has been running the system to this point and it has not worked.”

Mr Fox said it is difficult for the superannuation industry to have confidence in FWA because there is a widely held view that FWA lacks independence.

“The expert panel will be dominated by FWA, it will be chaired by the FWA President and FWA will appoint the part time members. How can the industry have confidence in a solution that is back to the past and more importantly, how can workers have faith in superannuation?”

Mr Fox said the loss of the option for employers to choose a fund is a very big disappointment, particularly to Australia’s small to medium size business owners.

“If employers want to select a fund that suits their workplace and they accept the responsibility to protect the interests of their employees, then they should be allowed to,” he said. “At the end of the day, if the government is setting the criteria for MySuper funds, then any fund meeting that criteria should be able to be selected as the default fund for a workplace.  By keeping superannuation as part of the industrial system and giving the power of selection to FWA, the value of competition is being lost to what is potentially a closed-shop solution.”

Mr Fox also said workers’ confidence in superannuation is falling and transparent policy settings are essential to help restore it.

“There is great fear from workers and retirees that the government will use superannuation as a short term budgetary solution at the expense of the long term funding it is intended for.  This Government-driven, anti-competitive influence over the choice of super funds undermines trust in our superannuation system.

“Competition is the cornerstone of efficient markets, where price and performance can be brought to bear – the MySuper arrangements and the default superannuation model are working together to effectively reduce competition, giving Australians inadequate choice in default funds.  This will ultimately lead to sub-optimal outcomes for Australian consumers.”

The post No Choice Superannuation appeared first on AdviserVoice.

The CSSA is responding to a statement from the Minister for Financial Services and Superannuation, Bill Shorten, on the Interim Report of the Productivity Commission Inquiry into Default Superannuation Funds (the Productivity Commission), which indicated the Government supports establishing a FWA expert panel responsible for selecting default super funds for inclusion in industrial awards.

“Fair Work Australia has been subject to a significant level of criticism in their handling of recent enquiries,” said CSSA President, Douglas Latto. “Their impartiality has been brought into question and they have taken a long time to reach decisions. We don’t believe they have the necessary resources, expert knowledge and high level of superannuation experience required to take on such a critical role; a role which will significantly impact the retirement savings of most Australians.”

Mr Latto said the CSSA shares concerns raised by the Shadow Minister for Financial Services and Superannuation, Senator Mathias Cormann, who said Minister Shorten’s expressed support for an FWA expert panel pre-empts the Productivity Commission’s findings and final recommendations and inappropriately favours industry funds.

“We have been encouraged by the Productivity Commission’s approach to date, which has clearly been to investigate ways in which to make the default super selection process more open, contestable and transparent,” Mr Latto said. “By indicating support for one of the options outlined in the interim report over another, we believe the Government is undermining the impartiality of the work being done by the Productivity Commission.”

Mr Latto said the CSSA believes that employers should be able to select any MySuper fund as a default fund on behalf of employees. 

“The roles of employees under a particular award can be very diverse,” he said. “Employers understand that better than most.  As such, we believe it is very important to allow them to tailor their superannuation offering to suit the needs of their own workforce.”

The post CSSA: FWA lacks expertise, experience to make default super calls appeared first on AdviserVoice.

Hon Bill Shorten MP, Minister for Financial Services & Superannuation said:
“The year 2012 will be remembered for the passage of historic reforms to ensure Australians can access good quality financial advice and increase the superannuation guarantee to 12%.  I commend the work of the Financial Planning Association who has played an instrumental role in helping to shape the reforms and improve professionalism in financial planning.  I equally support the FPA’s work through its Financial Planning Week initiative to help Australians gain a better understanding of how quality financial advice can help them to retire with comfort and dignity.”

Senator Mathias Cormann, Shadow Minister for Financial Services and Superannuation said:
“There is no doubt that Australians who start planning early, with the benefit of high quality advice to help them make informed decisions about financial challenges and opportunities throughout their lives, will end up better off. Those organisations which step up to the plate to champion the importance of high quality professional financial advice deserve our support.

“That’s why I strongly support the Financial Planning Association’s commitment to the promotion of professional standards and high quality advice. With increased public trust in the high standards of Australia’s professional financial planners more Australians will seek advice and benefit from the improved financial health and wellbeing which comes with having a plan.” 

Mark Rantall, CEO of the FPA welcomed the announcements:
“We welcome the acknowledgment and support from the government and shadow government for the launch of this year’s Financial Planning Week. Financial planning is integral to the financial wellbeing of all Australians. Research shows that people with a dedicated financial planner are more likely to feel financially secure and are more confident in dealing with their greatest financial concerns than those without. 

 “Financial Planning Week aims to encourage, educate and empower Australians to address their financial situation and discover the positive difference that sound financial advice can make. This is another initiative in our long-standing commitment to increase access to trusted financial advice for Australians.”

Financial Planning Week takes place from 20-26 August 2012.

The post Government and opposition welcome Financial Planning Week appeared first on AdviserVoice.

The call comes after news in the press yesterday which alleges the ISN has made secret side deals with a financial services industry group on issues relating to the proposed Future of Financial Advice (FOFA) reforms, such as the highly-contentious opt-in provisions and the use of the term ‘financial planner’.

“If the allegations are true, ISN is acting as a de facto policymaker on behalf of the Government. It is time for this kind of activity to end,” said AFA CEO Richard Klipin.

“In the interests of consumers and the people who serve them, the Minister for Financial Services and Superannuation must fully focus on good policy.”

Mr Klipin said the ISN has spent countless millions on advertising campaigns over a decade or more doggedly maligning advisers and undermining the value of advice and the ISN’s role in the FOFA debate needs to be put into context:

• They have proposed many of the contentious changes, including opt-in
• They represent a small  number  of  industry fund advisers, which constitutes less than  one per cent (1%) of all advisers
• The FOFA changes, as designed, will have minimal impact on industry fund advisers
• The ISN, according to its own research, expects to increase adviser numbers tenfold in the next 15 years under the FOFA legislation
• The ISN is a vested interest group in this debate, seeking to drive a substantial competitive advantage from this legislation.

“We believe the actions of the ISN have unfairly influenced the FOFA debate,” said Mr Klipin.

“But a golden opportunity now exists for Minister Shorten to bring all key stakeholders to the table and finalise all the key issues. This is the only way to serve the national, rather than sectional, interests.”

Mr Klipin encouraged the Independents to focus on good policy outcomes through amendments to the legislation.

“The AFA has always supported legislation which will improve transparency around advice and increase consumer access to advice,” Mr Klipin said. “However we believe that the draft FOFA legislation, as it currently stands, does neither.”

Earlier this month the AFA sent a letter outlining its five major concerns relating to the proposed FOFA legislation to the Independents, relevant frontbenchers and members of both Houses of Parliament.

The post AFA: FoFA side deals not in the national interest appeared first on AdviserVoice.

“This is a great outcome for common-sense; the FPA has consistently lobbied the government for the one-year transition and welcome Minister Shorten’s announcement. We believe a one-year transition will allow all financial planners the time needed to implement these reforms in a transparent and efficient way for the benefit of all Australians.

“The FoFA reforms are integral to the financial future of all Australians, therefore we want to ensure that discussions around and the implementation of the reforms are not rushed, potentially resulting in unintended consequences.”

“The FPA looks forward to hearing the government’s response to other recommendations made by the FPA, and many other industry representatives, throughout the inquiry.”

The post FPA welcomes one year transition announcement appeared first on AdviserVoice.

The reforms will commence from 1 July 2012, as originally announced, but the application of the provisions will be voluntary until 1 July 2013. Mandatory application will start from 1 July 2013.
This means that any business who wants to start complying with the reforms from 1 July 2012 will have the opportunity to elect to do so. From 1 July 2013, the entire industry will be required to comply.

“The Government has listened to concerns from the business and financial planning community that they need more time to prepare for these changes. This timetable also balances consumer needs, as it gives early industry movers the opportunity to provide commission-free products from 1 July 2012,” Minister for Financial Services and Superannuation Bill Shorten said.

“The revised implementation arrangements will lower industry implementation costs as they will be able to synchronise FOFA and Stronger Super reforms.”

“The FOFA reforms are about making sure more Australians can access affordable and better quality financial advice, free from the conflicts of interest created by commissions and other product payments. These reforms will drive greater competition and innovation and are a long term growth strategy for this important industry,” said Minister Shorten.

ASIC research shows that only 20 to 40 per cent of Australia’s adult population use or have used a financial adviser.
The Government will continue to work with all stakeholders to ensure these reforms are implemented in the most cost-effective way possible in the best interests of consumers.

The post Smoother Transition for Financial Advice Reforms appeared first on AdviserVoice.

The government introduced the new Superannuation Roundtable to consider ideas that arose on superannuation reform from the Tax Forum. 

The aim of the Superannuation Roundtable is to discuss topics around potentially providing Australians with more options in retirement and improving certain superannuation concessions. 

In this first sitting, the group is expected to discuss the proposed changes to the concessional contributions caps as a result of the transitional arrangements ending on 30 June 2012 and how it can logistically work for Australians moving forward. 

As per their submission to the federal budget 2012-13, the FPA has outlined key recommendations for the concessional contributions caps in order to improve access to financial advice for all Australians. 

The FPA recommends: 

1. Superannuation guarantee (SG) contributions are removed from the concessional contribution cap
2. The contribution cap for those over 50 continue indefinitely at $50,000, with a provision for indexation (commencing from 1 July this year) on both the $25,000 and $50,000 caps. 

Mark Rantall, CEO of the FPA said: 

“The FPA welcomes this opportunity to discuss our recommendations for the concessional contributions caps and the initiatives we believe the government must undertake in order to improve transparency of, and access to, financial advice for those Australians who are most in need of assistance in managing their financial affairs. 

“The long-term financial security and retirement readiness of all Australians is of utmost importance to the FPA and our members and we continue to strive to grow the financial advice profession in the best interest of the general public.”

The post More Australians should have the opportunity to self-fund their retirement, says the FPA appeared first on AdviserVoice.

While acknowledging that the reforms are likely to improve clarity around the conflicts in financial services and a lead to potential improvements in quality and process at the lower end of the market, Mr Rantall also said that there had been a fundamental flaw in the legislative process because no appropriate regulatory impact analysis had been conducted on the cost implications of the reforms either to industry or, more importantly, to consumers.

He also said that, although appreciative of the inclusive process and the fact that the FPA and other organisations had been allowed an active role in the FoFA development process, there still remained some confusion as to how and why certain decisions had been made.

It was therefore in the interests of all concerned to get back on track with the original intent of the FoFA reforms, which are to ensure that:

• Financial advice must be in the client’s best interests – distortions to remuneration, which misalign the best interests of the client and the adviser, should be minimised
• In minimising these distortions, financial advice should not be put out of reach of those who would benefit from it.

Mr Rantall went on to point out a number of issues with the proposed changes. These include projections showing that they would lead to a fall in adviser numbers from 15,400 today to 8,600 in 2024, a concerning figure for the future of the profession and accessibility to all Australians.

Further, without a regulatory approach that encourages long term trust in ‘professional advice’, the FoFA reforms are, on their own, unlikely to achieve what they set out to.

“The crux of the matter is that without regulation that allows consumers to differentiate between professional participants and others, they will continue to be subject to unnecessary risks,” said Mr Rantall.

For that reason, the FPA welcomed the Government’s commitment to reviewing a consultation paper on restricting the use of the term ‘financial planner’ to those who have appropriate, agreed qualifications.

“The FPA looks forward to working with Treasury and ASIC on developing the paper,” said Mr Rantall.

The PJC, led by the Minister for Financial Services, Bill Shorten, is holding public hearings this week to collate and examine submissions from prominent industry stakeholders about the draft 2011 FoFA reform bills.

The FPA, which represents nearly 10,000 of Australia’s financial planners, has been an active advocate both for its members and for consumers throughout the FoFA debate, and has led the way on many proposed reforms.  Its remuneration policy banning investment commissions is due to commence on 1 July 2012; 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.

The FPA was represented by Mark Rantall, Chief Executive Officer; Dante DeGori, General Manager of Policy and Government Relations; Deen Sanders, Chief Professionalism Officer and architect of the FPA Code of Professional Practice; and John Bacon, its General Manager of Professional Standards.

In the interests of clarity Mr Rantall concluded his remarks by reminding the Committee of the FPA’s specific recommendations on FoFA to date and highlighted the FPA’s ongoing commitment and availability to assist with achieving them.

The post Professionalism key to getting reforms back on track, FPA tells parliament appeared first on AdviserVoice.