The Financial Planning Association of Australia The Financial Planning Association of Australia

FPA vindicates key role in negotiating FoFA reforms

FPA vindicates key role in negotiating FoFA reforms

29 August 2011

The Financial Planning Association (FPA) welcomes further clarity on the Future of Financial Advice (FoFA) reforms released today, but continues to reject the Opt-In in proposal as a cumbersome and unnecessary impost on Australia’s professional financial planners and their clients.

“We have led the way on reforms proposed within the FoFA legislation – including the introduction of a best interest duty and a banning of commissions on investments. These initiatives effectively make Opt-In a redundant policy option,” Mr Rantall said.

The FPA welcomes the Government adoption of the detail of a number of issues – strongly advocated by the FPA – throughout the consultation process. The FPA has led and supported a vast majority of the consumer protection reforms announced today. They include:

  • New clients being the test for the opt-in trigger
  • A reduction to penalties for future potential breaches of opt-in; and
  • Flexibility in the way opt-in may be applied, including internet, email and phone.

These concessions may considerably reduce the cost of Opt-In to financial planners.

“The FPA also welcomes the modification by the Government to restrict its ban on insurance commissions to MySuper/default funds and group schemes, and making those bans prospective rather than retrospective,” Mr Rantall said.

“Limiting these bans will mean that personally advised consumers at least will not be disadvantaged. We remain vigilant to the needs of members of these funds and the process for servicing their insurance requirements.”

“We also feel that moving SG contributions from 9% to 12% will also significantly benefit consumers to accumulate adequate retirement benefits.”

Enshrining of “Financial Planner” under law

Additionally, the FPA is pleased to see a firm time-line for a consultation paper from Treasury investigating the enshrining of the term Financial Planner in law.

“This is a vital action that, if passed, will give all Australians the safeguard of knowing the financial planner they deal with is backed by appropriate qualifications and an ethical framework,” Mr Rantall said.

The FPA will continue to work with the Government and Treasury to develop the detail of what is the most significant reform to the advice profession in its history, ensuring the twin ideals of maximum consumer protection and seamless implementation for financial planners.

“FPA members already hold some of the highest professional and ethical standards and the government could make a much more significant contribution to one of FoFA’s aims of increasing consumer trust in the industry and provide clarity for consumers by restricting under law the use of the title Financial Planner to those financial planners who are members of an approved professional association.”

The FPA will closely review detail within the FoFA legislation before discussing issues directly with the Minister and providing a formal submission.