Government acknowledges FPA concerns on general advice as consumer risks eased by ’employee only’ rule
Wednesday, 19 March 2014
The Financial Planning Association of Australia (FPA) has welcomed the Government’s amended restrictions to the general advice exemption under FoFA.
The Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 was introduced in Parliament today.
The FPA has consistently and clearly raised the issue of potential consumer risks – through its submissions to Government and in the public arena – particularly highlighting the general advice exemption and conflicted remuneration issues.
“Today’s change of tack by the Government is a welcome approach. It shows our repeated efforts on behalf of Australian consumers and professional financial planners have not gone unheard,” said FPA CEO Mark Rantall.
“The FPA welcomes the 11th hour amended form of the general advice component. It essentially restricts the receipt of conflicted remuneration to employees only of a financial services licensee.
“Whilst this policy shift tightens the pre-conditions under which conflicted remuneration can be paid and is welcomed, the FPA still calls for the removal of the ability to reintroduce superannuation and investment commissions on General Advice altogether.
“This change, however, does draw a firm line between the polar opposites of product sales and appropriate financial advice,” he said.
Pragmatic reductions to red tape
The FPA also reaffirmed its support for select FoFA amendments introduced today to reduce red tape and facilitate higher standards of advice to all Australians.
These include the removal of the opt-in requirement; the retrospective application of FDS requirement; the ‘catch all’ provision of the Best Interest Duty and the facilitation of scaled advice. Each is a pragmatic and positive outcome for financial planners without consumer detriment.
“These particular amendments have been championed by the FPA since the FoFA reforms began and we welcome them. The changes will reduce the cost of doing business for financial planners and the flow-on costs to consumers. It’s a win for financial planners and a win for their clients.”
Though the FPA welcomes today’s improvement to limit the general advice exemption, it continues to oppose any potential re-introduction of investment and superannuation commission payments under the so-called General Advice Exemption.
“We will continue to work with Government, our members and the broader financial planning community to prohibit the re-introduction of commissions on investments and superannuation,” Mr Rantall said.
“From today we see greater clarity for Australians as they choose between receiving professional financial advice free from conflicted remuneration and buying a product from a salaried employee of a financial licensee who is incentivised to sell that product.
“The argument for enshrining the term ‘financial planner’ under law also grows stronger as the true separation from advice and product continues apace,” he said.
For a full copy of the FPA’s submission to Government on the FoFA amendments, click here.