Rhetoric and unnecessary scare mongering are clouding the facts about proposed amendments to the best interest duty component of the Future of Financial Advice (FoFA) legislation.
“Australian consumers have nothing to fear from proposed changes to remove sub-section (g) (section 961(B)(2) (g) of FoFA legislation,” says Financial Planning Association of Australia CEO Mark Rantall.
“We are witnessing an extraordinary effort by product providers and those who represent them to build a political position – based on flimsy arguments – in defence of a redundant section of FoFA pertaining to the best interests duty.
“In this case the facts really do speak for themselves. Consumers have nothing to fear from the proposed amendments. We reiterate the facts here, in chronological order and on the record, for all to see,” Mr Rantall said.
THE FACTS ABOUT SUB-SECTION (g):
The seven safe harbour steps are covered in the first obligation to act in the best interests of the client in s961B. It should also be remembered that s961B(1) states that “the financial planner must act in the best interests of the client in relation to the advice.”
Then s961B(2) provides the seven safe harbour steps as a way to help the financial planner discharge this duty. The purpose of this was to provide clarity and certainty about what a financial planner must do to meet their obligations.
The obligation does not end with the seven safe harbour steps. The financial planner must also provide advice that is appropriate, warn the client if the advice is based on incomplete or inaccurate information and finally, they must prioritise the client’s interests.
The obligation to warn clients and provide advice that is appropriate was present before FoFA, however the obligation to act in the best interest of the client and to prioritise the client’s interests are new and are not being repealed.
The FPA will continue its mission to educate consumers about the benefits of professional financial advice, and the professional difference consumers can benefit from when choosing a certified financial planning professional, operating under a world’s-best Code – the FPA’s Code of Professional Practice.
“The number one principle in that Code has always been that FPA members have an obligation to place the client’s interests first,” Mr Rantall concluded.