In an options-stage regulatory impact statement dated November 2013 and made public this week, the Department of Treasury lays out the practical impacts of the amendments to FOFA both for industry and the broader public, concluding the proposed changes will not water down the reforms.
“The proposed amendments are deregulatory and will represent a move towards a more efficient system whilst maintaining the core protections introduced by FOFA,” the document states.
The document also anticipates that some stakeholders such as “consumer groups” are unlikely to support the amendments due to a perceived dilution of the consumer protection elements, but says these concerns are unfounded.
“Despite these concerns, many of the measures which were originally introduced by FOFA will remain, including an amended best interests duty and the ban on conflicted remuneration,” the impact statement says.
In addition, the paper confirms estimated cost savings to the industry of approximately $190 million per year, with one-off implementation savings of approximately $90 million – signifying savings of just over half of the $375 million in initial estimated costs of FOFA compliance.
The bulk of this saving is expected to come from the removal of opt-in, which is estimated to provide cost savings of $76.9 million.
On the contentious issue of the best interests duty, the paper argues that the proposal to remove the catch-all provision will “make the best interests duty more objective and ensure that section 961B(2) functions as a true safe harbour”.
The document was released not long before Opposition leader Bill Shorten tweeted that “under the Abbott Govt’s new rules, financial planners won’t be required to “act in their clients’ best interests” – a proposition not supported by the Treasury impact statement.
Moreover, the document argues there will be broad economic benefits for the economy since “small businesses are likely to be able to spend more time on their core business of providing financial advice to consumers and less time on compliance-related activities”, which should result in “revenue growth opportunities” and a more competitive financial services sector.
Informed consumer, why would the adviser want to offer you advice on a product that he has not recommended, has no connection to and does not get paid to advise on. Informed consumer, i will assume you are a wage earner, who will not do any task greater than that setout in your employment contract, will not work any over time without being paid and provide the minmum service to your employer that can be excepted without you being terminated. But as an informed consumer/union member you are very imformed about what the world owes you.
The adviser still gets all the blame for product failures at the expense of both client and agents.
The product suppliers hide behind trusts and walk away often to start over again while it appears the regulators are powerless to take any meaningful action.
Yes there are product peddlers but they are thin on the ground and none of these rules will stop those crooks.
Informed Consumer, you must work for or be a director of a union-backed industry super fund?
As for Bill Shorten, he’s just doing what the labor government do best, bluff and scare monger people.
As long as Labor/ISA/Choice and Roy Morgan say its bad, we are highly likly to be on the right track. They are the ultimate contrarian indicator.
Dear Informed Consumer.
Obviously, your title is based on your overblown opinion of your knowledge of the provision of Financial Advice.
The products we recommend are filitered onto APL lists by internal research and external research houses cutting the universe of possible product and funds down via gateways of proberty. Our APL – cut out Basis Capital , ACR, Westpoint and most if not all Ag schemes. How many ” independant ” advisers got BURNED on those dogs ?
Can Dill Shorten be sued for slander?
Let’s work out what’s going to happen – under the FOFA rollback provisions advisers will be able to contract out of providing advice on your current investments in financial products, like the super fund you are already a member of. They will ask you instead to sign an agreement so that they only have to talk about the products they want to sell – it’s back to the old insurance agent days of the 80s and 90s – this is laughable and makes our financial advice industry an international embarrassment