Resistance in the Senate has led the Federal Government to abandon many of its controversial FOFA reforms announced last year. Minor amendments to the safe-harbour test and duty to prefer the interests of the client in the event of a conflict will be made for basic banking products and general insurance products. An extension the timeframe for advisers to send renewal opt-in notices and fee disclosure statements to retail clients from 30 to 60 days will also occur.
The reforms now have bipartisan support and return to the House of Representatives for a final vote. Significantly, the Government now considers the FOFA amendments settled and should be given time to operate.
However, the financial advice industry will not be spared from further reform with the Government now indicating its intention to action the recommendations of the Financial System Inquiry, on which we have previously reported.
The Government has committed to developing a new framework for the professional, ethical and education standards of financial advisers, with legislation being introduced before July next year. At the same time consultation will occur regarding the introduction of a product design and distribution obligation and a new product intervention power for ASIC.
Please click here to access the Federal Government’s response to the Financial System Inquiry.