FPA calls on Government to listen to industry recommendations on FoFA

The FPA today called on government to take industry recommendations into account when debating the FoFA bill in Parliament in the coming days. This announcement follows FPA disappointment in the recommendations outlined in the Senate Economics Committee (SEC) report on FoFA, tabled to the Senate today.

Mark Rantall, CEO of the FPA said:

“The original intent of FoFA was to improve transparency of, and access to, financial advice for all Australians. This is an effort that the FPA has consistently supported throughout all discussions with government and, whilst we have welcomed the opportunities to present our recommendations on behalf of our members and consumers, we believe the SEC has missed an opportunity to recommend improvements that would deliver on the consumer protections and benefits that FoFA was originally intended.”

“It is disappointing that, whilst many industry representatives have spent considerable time throughout the inquiry recommending amendments to enable FoFA to meet consumer’s best interest, most of this insight has not been reflected in reports tabled to government.

“The FPA has been very consistent and clear about what amendments we feel are needed to better FOFA and actually deliver on the intent and objectives. We have more recently provided these key amendments via  individual letters to each MP as parliament prepares to debate the respective FOFA bills during this sitting period. We hope that, whilst key industry recommendations have not been considered in the PJC or SEC reports, they are taken into account during the government debate on FoFA in the coming days.

Our recommended amendments continue to include:

• The removal of Opt-In renewal requirement;
• The retrospective annual fee disclosure statement requirement to be removed;
• A request for an amendment to the Best Interest duty to better facilitate scaled advice;
• Amend the definition of ‘group life’ within superannuation to allow for commissions to be payable on individually advised insurance cover;
• A 1-year transition and implementation timeframe of the FOFA reforms similar to those applied for FSR; and
• The need for an independent regulatory impact statement on the reforms to industry and consumers.

“Notwithstanding the limitations of both the PJC and SEC reports, the FPA will continue to raise professional standards on the journey that we embarked upon well before the FoFA reforms were initiated in 2010.  The year prior, we approved a new remuneration policy to remove investment commissions and improve client disclosure which will come into effect on 1 July 2012. And also since this time, the number one principle in the FPA Code of Professional Practice requires members to place the interests of their clients ahead of their own; and FPA practitioner members all work to higher professional standards than required by law.”

“The original intent of FoFA was to improve financial advice for all Australians. We believe the FPA has kept to that intent and we hope that this is what the government delivers on.”