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Treasury admitted in a Senate Estimates hearing last night that last minute additions to the FoFA draft (including Opt-In) breach the government’s own best practice regulation requirements.
“This frank admission by Treasury vindicates our recent criticism of the rushed alterations made to the final draft FoFA legislation. These were critical changes ushered into an important draft with no consultation and zero consideration for the harsh impacts on financial planners and their clients,” said FPA CEO Mark Rantall.
“The FPA is committed to supporting sensible reforms which bolster the momentum we have created in enhancing consumer trust in advice and building a strong financial planning profession. But reform must improve – not hinder – sensible consumer protection standards.”
Treasury confirmed last night that “Regulatory Impact Statements were prepared for the various other (FoFA) reforms (including Opt-In) but were not assessed as adequate for the decision-making stage”. The Government has thus been issued with a ‘non-compliance’ notice by the Office of Best Practice Regulation (OBPR) in respect of FoFA 2011.
Consequently, the OBPR has assessed the proposal as being non-compliant with the Australian Government’s own best practice regulation requirements.
“We have worked closely with Government over the past two years to ensure this draft legislation works for both financial planners and all consumers.
“This remarkable development confirms our view that, whilst having the correct intent of improving consumer trust and access to advice, the legislation introduce to parliament fails to deliver on its practical execution. We see no reason for the Government to persist with its Opt-In and retrospective fee disclosure statement policies,” Mr Rantall said.
The FPA calls on the government to scrap the controversial measures and focus on increasing consumer protection measures such as the best interest test duty and the banning of commissions.