Financial Planning Association rejects FoFA Bill
In fact, opposition to the Bill by the peak financial planning body remains vehement, with CEO Mark Rantall vigorously holding the line on established points of difference, while raising further objections in response to new features of the Bill that have only just been made public today.
The FPA said that Treasury have made further amendments to the original draft without consultation or support from financial planners:
- Opt-In: Ignoring significant industry opposition, the Government has included Opt-In provisions in the Bill that hit Parliament today. The implementation of Opt-In will require consumers to sign an Opt-In to advice renewal certificate every two years – without doing so, the consumer will no longer be in a position to be notified or advised by their financial planner.
- Retrospective disclosure statement: This new provision requiring fee disclosure statements for all existing clients was never discussed with the financial planning industry and was included in the legislation without any prior consultation. In practice, investment product providers currently already issue fee statements. Accordingly, this is an unnecessary and significant administrative burden to both consumers and financial planners.
In addition to administrative burdens, costs and negative impacts to consumers, the FPA highlights the inconsistency of these provisions, with Opt-In affecting only new clients and the disclosure statement affecting all clients.
“We are disappointed with how the legislation has been drafted and by the amendments made to FoFA Tranche 1 and do not support this Bill as it currently stands,” said Mark Rantall. “The FPA has held many open conversations with Government outlining where our members stand in relation to Opt-In and FoFA in general and how it will affect consumers.
The FPA has both welcomed and led the way in introducing a ‘best interest duty’ and the banning of commissions on investments in Australia. This, it says, makes Opt-In a redundant policy.
“It is our concern that should a consumer not sign an advice renewal certificate, they could be left without financial advice at their most vulnerable time – for example, pre-retirement and when markets are volatile. This kind of legislation is not in place anywhere else in the world. Further, it is redundant if ‘best interest’ and a ban on conflicted remuneration is introduced.
“As expected, CHOICE and ISN have both come out in strong support of the Bill, however we believe they are driven by self-interest rather than consumer interest,” said Mr Rantall.
“As we continue to point out, the FPA supported transparency of payments and commissions long before FoFA was introduced, while these groups continue to have conflicted remuneration structures that lack transparency. We would be interested in hearing these supposed ‘consumer advocates’ reveal the true motives behind driving these reforms which, we again highlight, were not included in the Ripoll recommendations.
“CHOICE, for example, has admitted to receiving a referral fee from the Big Bank Switch campaign, at the same time continuing to be one of the most vocal opponents of commissions paid to financial planners. CHOICE is displaying double standards on payments to those providing financial advice.”