FPA responds to draft legislation addressing Royal Commission recommendations
The Financial Planning Association of Australia (FPA) has responded to the Federal Government’s draft legislation released today, which addresses 22 of the recommendations put forward last year by the Financial Services Royal Commission. It has however cautioned that the draft legislation will have significant and real impact for financial planners.
The FPA has been in close consultation with the Minister, Treasury and other associations to ensure the legislation reflects the best interests of FPA members and the financial planning profession more broadly.
The draft legislation closely aligns to the Recommendations outlined in the Royal Commission, but if implemented, the FPA warns it will further increase the time and the administration burden on financial planners helping their clients.
FPA Chief Executive Officer Dante De Gori said the FPA is committed to helping members prepare and comply with the new legislation.
“The FPA continues to advocate strongly on behalf of members. However, the most important thing for financial planners is to understand the impact this will have on their business and to start planning how they can efficiently and effectively operate their business in this new legislative environment,” he said.
“This legislation will require business practice changes, administration changes, disclosure changes and financial planners need to be thinking about this sooner rather than later.”
One specific proposed Recommendation in the draft legislation that the FPA continues to challenge relates to the requirement for financial advisers to renew client fee arrangements every 12 months, rather than the current two-year period.
“The FPA agrees financial advisers should be required to periodically review and renew ongoing fee arrangements, document them and seek the consent of their clients for any fees to be charged,” Mr De Gori said.
“However, we believe requiring this to be conducted annually without any modification to the laws around when an ongoing fee arrangement can be renewed rather than reset, adds considerable time and cost pressures on financial planning practices. It is not practical and will be too much of an administrative burden for many practices.”
The FPA continues to support members through implementing regulatory, practice and business model changes through education materials on its MyCPD platform, detailed best practice Guidance Documents, the FPA Code of Professional Practice and bringing together and supporting communities of practices working together in the FPA Professional Practice program. It will provide a more detail response to the draft legislation during the month-long consultation period.