NEED TO KNOW
The much anticipated proposals to unwind parts of the Future of Financial Advice (FoFA) legislative regime have been announced by the Coalition Government. The announcement is likely to have a mixed reaction from the industry with many having already invested heavily in getting their systems and procedures ready for FoFA. Click here for a link to the Government’s announcement.
SUMMARY OF THE PROPOSED AMENDMENTS TO FOFA REGIME
The Coalition Government maintains that the proposals aim to increase certainty in the financial advice industry, and to reduce costs and red tape for small businesses, financial advisers and consumers who access financial advice. The proposals are far-reaching and the devil will be in the detail.
Some commentators have already criticised the Coalition’s decision to unwind parts of the FoFA legislative regime. It is difficult to argue against the policy rationale for FoFA which is centred on restoring integrity in the financial planning industry and allowing investors to obtain financial advice that is in their best interests. Indeed, many parts of the financial planning industry have incurred considerable costs in getting ready for FoFA as legislated by the previous Government.
The Coalition Government’s proposals resemble comments made by the Coalition in response to the 2012 Parliamentary Joint Committee inquiry into FoFA. A list of the proposals is summarised in the table below.
Click here to view table.
In additional to the above, minor amendments will be made to the FoFA legislation to address technical issues and clarify the legislation. The Government also proposes to make consequential amendments to the application of the wholesale and retail client distinction.
It remains to be seen whether the proposals will be able to strike an adequate balance between the interests of investors and financial planners to bring about the “certainty and stability” flagged in the Government’s announcement.
No draft legislation has been provided at this stage but it is expected that any amendments will follow a consultation process in 2014.