Andrea Slattery

The Federal Government’s statement that it is committed to ensuring that the promised register of financial advisors will have to include their qualifications and professional association membership is welcomed by the SMSF Professionals’ Association of Australia (SPAA).

SPAA CEO/Managing Director Andrea Slattery says: “It’s reassuring that the Minister for Finance, Senator Mathias Cormann, has reiterated the Government’s decision to have the register in place by March 2015, and that it must include advisers’ qualifications and professional association membership.

“It has always been SPAA’s contention that for a register to fully benefit consumers then they must be able to identify advisers who have the requisite skills and professionalism.

“An obvious benchmark for consumers is knowing what qualifications and professional association membership an advisor has because it’s these two areas – education and professionalism – that are the key to quality financial advice.

“It’s only when a register includes all the relevant information will consumers feel confident they are getting the best possible advice.”

Slattery says the ongoing lifting of professionalism in financial advice greatly depends on increasing educational standards and improving the personal accountability of financial advisors.

“Having the register record educational qualifications and association membership will encourage advisers to improve their qualifications and become professional members of the relevant associations.”

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Andrea Slattery

Finance Minister Senator Mathias Cormann’s statement on the Coalition Government’s FoFA amendments is a positive step in the right direction for the financial advice industry, says the SMSF Professionals’ Association of Australia (SPAA).

SPAA CEO Andrea Slattery says it has always been the organisation’s position to support the removal of the best interest duty catch-all provision because of its potential to be too broad in its application, create uncertainty and involve a high compliance burden for financial advisors.

“The Minister’s statement today should reassure the industry and consumers that best interest duty has not been watered down and will still ensure financial advisors act in their clients’ best interests when providing personal advice.

“This was a point made strongly by SPAA’s Patron and former Chief Justice of the High Court, Sir Anthony Mason, at the 2014 SPAA National Conference, when he said: ‘If it should come about that some aspect of the best interests duty is to be wound back, it would be a grave mistake to think that a financial advisor is under no duty to act in the interests of the client.

‘Quite apart from relevant statutory provisions, the common law imposes a duty on an advisor to act in the interests of its client’.”

“We were also encouraged by the Minister’s commitment to improving the professionalism of financial advice through lifting professional, ethical and educational standards. These are goals at the core of SPAA’s pursuit to improve the competency and quality of financial advice delivered to SMSF trustees and consumers more generally.”

In regards to the announcement on conflicted remuneration and general advice, Slattery says the Minister’s announcement is a positive move which helps in addressing the industry’s concerns about the conflicted remuneration exemption.

“It is encouraging that the Government has listened to the industry’s concerns on this issue and has heeded them.”

SPAA has been concerned about the ramifications of the conflicted remuneration general advice exemption, but is reassured by the Minister’s announcement that there will be no wholesale reintroduction of commissions to financial advice.

“We are especially pleased to see that the amendments will still prohibit ‘any payment made solely because a financial product of a class in relation to which the general advice was given has been issued or sold to the client’.”

SPAA supports the Government’s intentions to put in place regulation-making powers that may prescribe circumstances in which all or part of a benefit is to be treated as conflicted remuneration to stop institutions inappropriately using the conflicted remuneration exemption.

Slattery says: “We will be keeping a very close eye on how industry practices develop around the provision of general advice and the conflicted remuneration exemption and will continue to work closely with the Government to ensure that the exemption does not lead to undesirable advice practices and consumer outcomes.

“SPAA sees FoFA as a critical element in improving the quality of financial advice and increasing consumer protection.  However, in the longer-term SPAA wants high-quality financial advice to be driven by a professional industry of competent advisors.”

“We have proposed a streamlined financial advice licencing model that removes the general advice category and has a simple split between a consumer being provided with factual/sales information or personal financial advice.

“This model promotes professionalism of financial advice and is easier for consumers to understand the nature of the advice they are receiving,” Slattery says.

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Mark Rantall

The Financial Planning Association of Australia (FPA) today congratulated Finance Minister Mathias Cormann for handing down a decisive victory in favour of all consumers who seek certainty in their dealings with the financial advice system in Australia.

“The Future of Financial Advice reforms (FoFA) began as an ambitious sprint to transform our sector, became a four-year marathon bogged in detail and has ended as a smart-run victory to place the interests of all Australians first,” said FPA CEO, Mark Rantall.

“On behalf of the professional financial planners in Australia we welcome today’s announcement by the Minister, and acknowledge that reason, common sense and a robust democratic process has each done its job.

“The FPA will now lend its weight to seeing through the orderly implementation of today’s FoFA announcement into law, and encourages its members to embrace the upside benefits of operating within a world’s best consumer protection framework,” Mr Rantall said.

Mr Rantall said the FPA had campaigned hard over 48 months on key aspects of FoFA and was delighted to see its work on specific issues recognised and reflected in today’s announcement.

FPA wins

Specifically, the FPA is delighted to have championed the following outcomes:

The ‘Wolf of Wall Street’ clause

The FPA is particularly pleased with, and welcomes, the Government’s heeding of its recommendation to eliminate the so-called ‘Wolf of Wall Street’ clause within general advice, by removing any possible return of commissions on investments and superannuation products.

“This gap in the FoFA draft needed to be closed and nailed shut forever by the Government. The concept of rewarding sales people on the volume sales of financial products and services in the form of embedded product commissions is a bygone practice and has no place in a professional, client-centric advice world.

“The FPA is delighted with this outcome,” Mr Rantall said.

Mr Rantall said that today’s announcement to amend FoFA should be given swift passage through Parliament, and he commended the final form of the process to FPA members and the Australian public as not just a legislative victory but an unprecedented opportunity to forever cement a viable, vibrant professional advice system in Australia.

“We stand together with all Australians. This new shift in the landscape gives us even greater confidence in our collective future,” Mr Rantall said.

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Mark Rantall

The Financial Planning Association (FPA) responded yesterday to the election of the Coalition into Government.

Mark Rantall, CEO of the FPA said: “The FPA congratulates the Coalition on their victory in the 2013 federal election this weekend. We acknowledge that it will take some time to settle into office and face into the reforms that need to be instigated. In time, we look forward to working with the new Government particularly helping them with changes to both regulations and legislation for the removal of Opt-In provisions, simplification of Fee Disclosure Statements, more flexibility on allowing for commissions on insurance inside Superannuation and clarity on Best Interest Duty to allow for scaled advice.

“We have worked well with senator Mathias Cormann and we now eagerly await the announcement of our relevant Minister. Financial planning is of national importance and we want to continue to work with the leaders of this country to ensure more Australians have access to professional and trusted financial advice.”

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Brad Fox

The Association of Financial Advisers (AFA) today congratulated incoming Prime Minister, Tony Abbott and the Federal Coalition on their success at the polls.

“The AFA has a mandate to work with Government to achieve outcomes that support advisers and advice businesses in the important role they play helping to build, manage and protect the wealth of everyday Australians,” says AFA CEO Brad Fox. “With the new Coalition Government, this will involve addressing issues close to the heart of the financial advice industry and the impact they have on consumers.”

Mr Fox says the AFA will proactively engage the incoming Minister for Financial Services and Superannuation and seek to contribute to the new Government’s financial services and superannuation agenda. “We will be particularly interested in the Government’s approach to improving the effect of the Future of Financial Advice (FoFA), Stronger Super and Default Super reforms,” he says.

While in Opposition, Mr Fox says the Coalition team demonstrated a strong understanding of the dynamics of the financial advice industry and put a considerable amount of effort into influencing the direction of the recent reforms in the financial services industry. “The AFA is supportive of the changes to the FoFA reforms as announced by Senator Mathias Cormann and the Coalition prior to the election and will work closely with the new Government as these changes are implemented.”

The AFA is also looking forward to the Coalition ironing out some of the problematic consequences of FoFA, including problems with the Grandfathering rules which have reduced competition in the advice market and the ability for advisers to change licensees.

The AFA is also seeking a solution that will allow corporate super advisers to both recommend a fund and continue to service the fund.

“The AFA strongly supports the consumer benefits associated with FoFA and we are looking forward to the Coalition’s promised roll-back and amendment of parts of the legislation which will eliminate much of the red tape associated with the reforms, improve the effectiveness of the financial advice industry and help advisers deliver quality, cost-effective advice to Australians,” Mr Fox says.

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Greg Cooper

The Coalition’s financial services policies will deliver certainty and stability to Australian retirees that their superannuation will not be tinkered with, Greg Cooper, chairman of the Financial Services council and CEO of Schroders Australia said today.

Speaking at the FSC’s Annual Conference, Mr Cooper said: “As the second biggest financial asset for most Australians after the family home, stability in superannuation policy settings is essential.”

“We welcome the Coalition’s ‘no adverse changes’ commitment. This announcement, along with the Treasurer’s yesterday, will remove super from the annual Budget night uncertainty.”

“Lifting super from the annual uncertainty cycle is an outcome the wider superannuation industry supports,” Mr Cooper said.

He also thanked Senator Mathias Cormann, Shadow Minister for Financial Services and Superannuation, for his significant contribution to Australia’s financial services industry since his appointment in 2010.

“As a result of Senator Cormann’s leadership and heavy lifting, the Coalition has a set of well-developed policies in financial services,” Mr Cooper said.

“The FSC has been very supportive of the Coalition’s stated policy commitments including the continued development of Australia as a financial centre, substantial refinements of the Future of Financial Advice and Stronger Super reforms, introducing true competition in default superannuation; and commitment to no adverse changes to superannuation in the next Parliament.”

“But it’s not the industry that will ultimately be most grateful, it will be the retirees of the future that will derive the full benefit from this new consensus on super policy,” he said.

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