A- A A+

Are financial advisers going to get a free pass from the government?

Staff reporter |  10 February 2014  |  Super

Free PassThe Assistant Treasurer, Arthur Sinodinos has released for public consultation a draft Bill and Regulation regarding proposed amendments to the Future of Financial Advice legislation. The changes initiated by Labor to make financial advice and the superannuation sector more transparent may be removed. The preposterous situation where those financial service are under no obligation to think of their client first may end up continuiing.

The proposed subjects for "discussion" include:

-   removing the opt-in requirements (whereby clients have to "opt in" to their agreements with       finaincial avisers every two years).
-    removing the annual fee disclosure requirements for pre-1 July 2013 clients;
-    removing the 'catch-all' provision from the best interests duty;
-    explicitly allowing for the provision of scaled advice;
-    exempting general advice from the ban on conflicted remuneration; and

-    broadening the existing grandfathering provisions for the ban on conflicted remuneration.
In other words, back to the era of a free pass for financial advisers. No ban on conflicted remuneration? What other profession would be allowed to gtet away with that? SMSF investors should be wary. Their advisers are likely to have no formal responsibility to look after their interests, only their own. They may choose to, they may not.

The regulations are expected to be finalised at the end of March and introduced into federal Parliament in autumn of this year. There will also be an inquiry charged with examining how the financial system could be positioned to meet Australia's evolving needs and support Australia's economic growth.

 The response in the AFR from the interested parties was disturbingly positive.

Association of Superannuation Funds of Australia

ASFA is pleased that the draft Future of Financial Advice legislation does not change the definition of intra-fund advice.

The ability to deliver intra-fund advice in its current form enables all superannuation funds to provide real help to fund members regarding their interest in the fund. By not further limiting the definition, fund members will continue to have access to this important service.

ASFA chief executive Pauline Vamos says this is a good outcome for fund members.

“One of the key pillars of our superannuation system is ensuring people can get the most out of their superannuation. At the very least, this includes access to basic advice that helps them make simple decisions regarding their accounts.”

Financial Planning Association

“We are pleased that the government has progressed with its promised changes to ensure a more workable FoFA framework for financial planners and their clients. We will now carefully consider the draft amendments to ensure they will reduce compliance costs, work in a practical way for planners and their clients and do not introduce any unintended negative consequences,” FPA chief executive Mark Rantall said.

“The FPA has long advocated for a more sensible, workable and practical FoFA legislation. We are pleased that the government has therefore committed to consulting on the legal amendments necessary to fix these issues as a matter of urgency.”

Financial Services Council

Consumers will benefit from the proposed reforms to the Future of Financial Advice legislation announced today.

“The proposed refinements to FoFA outlined today will make it easier for Australians to get affordable advice which is in their best interest. This is good news for consumers,” FSC chief executive John Brogden said.

“Clarification on the Best Interest Duty is a positive proposal which will reduce the cost of financial advice in many instances without reducing the protections built into the reforms to protect consumers.”

Association of Financial Advisers

“We are very pleased to receive the drafts in the timeframes that the Minister has previously outlined. We look forward to working through the detail, consulting with our members and our FoFA Implementation Working Group, and then making a submission to the government,” AFA chief executive Brad Fox said.

Mr Fox said that at first glance it appears that these changes are in line with the intent expressed by the Minister and retain appropriate consumer protection as well as enhancements that reduce regulatory overreach in the delivery of financial advice."

It is worrying when so many lobby groups are sounding pleased. Those relying on financial advice should be cautious.



Similar articles from Super

Where DIY super is heading

PSI | 2/26/2014

Way ForwardA survey of self managed super trustees reveals a strong streak of independence and a liking for shares and cash. The results are significant for what they say about the role of financial advice.

The giants who dominate the super industry

PSI | 2/23/2014

MellerAn interview with AMP head Craig Mellor reveals how much the "big boys" dominate the superannuation industry and the domestic investment options. It is worth examining what these players are thinking when crafting an investment strategy.

The doubtful future of the future of financial advice

PSI | 2/13/2014

Future doubtThe Coalition's proposed "reforms" of the Future of Financial Advice are dubious in the extreme. Why should financial advisers not be subject to perfectly normal professional standards, such as not having a conflict of interest? Two lawyers have described the consequences. It is another reason for the DIY fund.

DIY fund lobbying heats up

PSI | 12/8/2013

 lobby The politics of DIY super is heating up, with the industry funds flexing their muscles and lobbying the Federal Treasurer, Joe Hockey, hard. SMSFs do not have as co-ordinated a voice.

Pressures on super mount

Staff reporter | 12/1/2013

InsuranceInsurance premiums are rising, gobbling up the increases in super contributions. And lobbyists for the financial advice industry are gearing up their efforts to have legislative changes watered down. It is a time for SMSF investors to be wary.



Subscribe to the Personal Super Investor weekly email to keep abreast of developments in SMSF law and investment markets. SMSF investors looking to improve investment returns from shares, property, cash or other specialised investments, will find the PSI weekly newsletter an invaluable resource.

Subscribe now »


The contents of this website are of a general nature only and have not been prepared to take into account any particular investor's objectives, financial situation or particular needs. Our content is not intended to be advice and must not be relied upon as such. You should seek independent advice tailored to your specific circumstances prior to making any decisions. Personal Super Investor does not provide financial product advice or recommend any financial products: Where this website or it derived newsletter/electronic publication refers to a particular financial product, whether it be within our editorial or a 3rd party advertising, advertising promotion or advertorial, then you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the PDS before making any decision about whether to acquire the product. We also recommend that you should seek professional advice from a financial adviser before making any decision to purchase any financial product referred to on this website. We do not make any representation or warranty that any material on the Personal Super Investor website will be reliable, accurate or complete, nor do we accept any responsibility arising in any way from errors or omissions of our content or any content provided by any advertiser appearing the Personal Super Investor website. We will not be liable for loss resulting from any action or decision by you in reliance on the Material (whether editorial or advertising) on the Personal Super Investor website, nor any interruption, delay in operation or transmission, virus, communications failure, Internet access difficulties, or malfunction in your equipment or software. By using the site you acknowledge that we are not responsible for, and accept no liability in relation to any content contained on the site that you may use, including any other users’ use of the Personal Super Investor website in any circumstance. You use the Personal Super Investor website at your sole risk.