Minister Cormann’s FoFA position a landmark victory
The Financial Planning Association of Australia (FPA) today congratulated Finance Minister Mathias Cormann for handing down a decisive victory in favour of all consumers who seek certainty in their dealings with the financial advice system in Australia.
“The Future of Financial Advice reforms (FoFA) began as an ambitious sprint to transform our sector, became a four-year marathon bogged in detail and has ended as a smart-run victory to place the interests of all Australians first,” said FPA CEO, Mark Rantall.
“On behalf of the professional financial planners in Australia we welcome today’s announcement by the Minister, and acknowledge that reason, common sense and a robust democratic process has each done its job.
“The FPA will now lend its weight to seeing through the orderly implementation of today’s FoFA announcement into law, and encourages its members to embrace the upside benefits of operating within a world’s best consumer protection framework,” Mr Rantall said.
Mr Rantall said the FPA had campaigned hard over 48 months on key aspects of FoFA and was delighted to see its work on specific issues recognised and reflected in today’s announcement.
Specifically, the FPA is delighted to have championed the following outcomes:
- Sensible amendments to FoFA that maintain a high bar on consumer protections and that are also practical and efficient
- Reforms that are effective, efficient and deliver appropriate protections to consumers
- Recognition of the FPA’s public position to provide a practical, workable and affordable FoFA legislation for financial planners and their clients
- Removal of unnecessary and duplicated red-tape regulation, including the Opt-In and retrospective Fee Disclosure Statements
- A complete ban on commissions on investments and superannuation products
- Removal of clause ‘g’ in the safe harbour steps of the best interests duty to provide certainty and clarity for both financial planners and their clients on what they should expect when acting in the best interests of their client
- A correction of the grandfathering regulations made to remove the current restrictions on trade for financial planners who change employers/licensees and enable fair market competition for financial planners selling their business.
The ‘Wolf of Wall Street’ clause
The FPA is particularly pleased with, and welcomes, the Government’s heeding of its recommendation to eliminate the so-called ‘Wolf of Wall Street’ clause within general advice, by removing any possible return of commissions on investments and superannuation products.
“This gap in the FoFA draft needed to be closed and nailed shut forever by the Government. The concept of rewarding sales people on the volume sales of financial products and services in the form of embedded product commissions is a bygone practice and has no place in a professional, client-centric advice world.
“The FPA is delighted with this outcome,” Mr Rantall said.
Mr Rantall said that today’s announcement to amend FoFA should be given swift passage through Parliament, and he commended the final form of the process to FPA members and the Australian public as not just a legislative victory but an unprecedented opportunity to forever cement a viable, vibrant professional advice system in Australia.
“We stand together with all Australians. This new shift in the landscape gives us even greater confidence in our collective future,” Mr Rantall said.