Industry bodies continue to ‘maintain the rage’ against the Future of Financial Advice (FoFA) reforms, accusing the Government of being deliberately misleading and creating a double standard.
The Association of Financial Advisers (AFA) has once again called on the Minister for Financial Services and Superannuation to provide evidence and modelling to back up the claim that FoFA will deliver a ‘growth strategy’ for the industry.
“While the FoFA reforms were purportedly designed to protect consumers, the reality is the only winners will be industry funds and the big end of town,” said AFA CEO, Richard Klipin.
The reality is the only winners will be industry funds and the big end of town
He warned that the ongoing uncertainty created by the draft reforms may lead to more industry consolidation and less independent advice, citing the recent sale of Count to the Commonwealth Bank of Australia as an example of the “unintended consequences” of the reforms.
“We believe that less competition in the industry and greater consolidation spells fewer choices for Australian consumers,” Mr Klipin said. “And while we congratulate Count, we believe the sale of the largest independently-owned network of financial planning accountants and advisers in the country, to one of the big listed players may be a sign of things to come.”
The AFA is also urging the Federal Government to delay the implementation of the reforms, saying advisers will find it difficult to make significant changes to the way they operate by the proposed 1 July 2012 deadline.
Also hitting out at the Government this week, for what it calls ‘a blatant demonstration of double standards’, is the Corporate Super Specialist Alliance (CSSA).
As part of the consultation process being undertaken by the Stronger Super program, the Government has indicated that intra-fund advice will not be subject to the same requirements (such as opt-in and written disclosure) as other personal advice.
CSSA President, Douglas Latto, said the Government intends to make it possible for super fund members to access personal financial advice which will be paid for via a collective fee, by introducing an intra-fund advice fee into both MySuper and other corporate super funds (to be known as choice funds).
This is possibly the most patent demonstration of double standards we have seen to date in the FoFA debate
“This is possibly the most patent demonstration of double standards we have seen to date in the FoFA debate,” Mr Latto said.
“Personal financial advice is exactly that, highly personal. Why should all members of a super fund subsidise the personal financial plans of a few?”
“Making the situation worse, the collective fee will not, as it is now in the corporate super environment, be tailored to suit the needs of individual employers and their employees but by the trustees of the fund, at a standard level for all members,” he said.
“The Government, in its paternalistic fashion, has again decided what is good for you: in their view, one size fits all.”
