FPA leads with pragmatic, positive FoFA recommendations to Treasury

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Monday, 24 February 2014

The FPA has submitted its recommendations to Treasury outlining positive measures to ensure that the FoFA legislation is drafted in the best interests of the Australian public.

Dante De Gori, General Manager of Policy and Conduct at the FPA, said: “We are broadly supportive of the proposed improvements to FoFA; however, we have identified some areas for improvement in the amendments and have submitted suggested policy enhancement in those areas.

“The overall aim of the FPA’s submission is to provide workable alternatives that will ensure the final legislation will assist financial planners in providing high quality, professional financial advice for the greater good of the Australian public.

“A good example is the pragmatic measures we have outlined to remove layers of red tape and provide greater certainty for scaled advice. Many of the draft FoFA changes are positive, however they also require careful management in order to avoid any unnecessary risk or detriment to consumers,” Mr De Gori said.

The FPA’s recommendations were drafted specifically in relation to key aspects of:

• General advice: the FPA does not support commissions via this proposed amendment
• Scaled advice: the FPA believes greater tightening is required for the appropriate delivery of scaled advice to avoid unintended consequences
• Best Interests Duty: the FPA endorses the removal of sub-section s961B(2)(g)
• Conflicted Remuneration: the FPA has recommended stronger consumer protection mechanisms by way of removal of unnecessary proposed Corporations Law amendments and clearer guidelines pertaining to the treatment of general advice exemptions, while banning conflicted remuneration for complex financial products
• Opt In and Annual Fee Disclosure Statements: the FPA supports the repeal of opt-in and also supports prospective Fee Disclosure Statements.

Mr De Gori concluded: “The FPA will continue to work with Government and Treasury to raise the standards of financial advice in Australia and protect the financial planning profession as well as the clients, without whom the profession would not exist.”

Download the FPA’s submission.