A senate motion to disallow amendments to the Future of Financial Advice (FoFA) reforms has been passed.
The repeal affects the Government’s proposed amendments to the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014. The motion was passed by the senate on 24 November 2015, to remove a number of the proposed amendments to FoFA and to otherwise implement minor and technical changes.
Proposed amendments to the Bill regarding the best interest duty and provisions clarifying that a client and adviser could agree on the scope of any scaled advice sought were removed by the senate. The disallowance of these changes mean the best interest duty is as currently stated in section 961B of the Corporations Act 2001.
Also, under the current law, remuneration (both monetary and non-monetary) received in relation to both personal advice and general advice is captured by the ban on conflicted remuneration. The Bill proposed a targeted general advice provision that deemed benefits on general advice to not be conflicted remuneration if certain conditions were met. This proposal was removed by the senate. The carve out for general insurance products for conflicted remuneration remains unchanged.
The minor and technical amendments to the Bill relate to:
- amending the short title of the Bill;
- extending the time for fee recipients to provide a renewal notice to a retail client from 30 to 60 days after the client’s fee renewal notice day; and
- extending the time for fee recipients to provide fee disclosure statements to pre-1 July 2013 retail clients from 30 to 60 days.
The senate also removed the following from the Bill:
- changes to the Statement of Advice (SOA) requirements;
- repeal of the requirement that licensees send fee disclosure statements to pre-1 July 2013 clients;
- repeal of the opt-in requirement for continuing an ongoing fee arrangement between a fee recipient and a client;
- changes to the definition of ‘volume-based shelf-space’;
- changes to the best interests duty and scaled advice (see above);
- changes to the execution only provision;
- changes to allow the payment of mixed benefits; and
- the general advice exemption from conflicted remuneration (see above).
The passing of this Bill is likely to signal the finalising of the FoFA reforms for the immediate future.
To review all the amendments click here.