The passing of the Future of Financial Advice (FoFA) reforms legislation by the lower house last week has been met with a mixed response from the industry, following a last minute amendment to the opt-in provisions.
Just prior to the vote on the FoFA Bills, Minister for Financial Services and Superannuation, Bill Shorten, announced an amendment to opt-in which would provide class-order relief from the requirement for advisers abiding by a professional code of conduct. The change appears to have resulted from negotiations between Independent MP, Rob Oakeshott, the Financial Planning Association (FPA) and the Industry Super Network (ISN) (see: Opt-in Class Relief Offered).
In a statement issued after the Bills were passed, the FPA said the concessions on opt-in signalled a new chapter of security and protection for consumers and facilitated the FPA’s mission for financial planning to evolve into a universally respected profession.
… the concessions on opt-in signal a new chapter of security and protection for consumers
FPA CEO, Mark Rantall, said that while the Association remained opposed to opt-in, he “…hoped members would see that the end result is what counts”.
“For FPA members, the formal opt-in process may not apply and they may not be subject to that law at all. Our members are also in the best possible position to be captured under the restricted definition of the term ‘financial planner’ which will be tabled in Parliament next year. There are no other groups or bodies that can claim these concessions for their members.”
Mr Rantall acknowledged the Government, the Opposition and the Independents for their open collaboration, hard work and contribution to the final shape of these reforms.
The ISN also issued a statement saying it applauded the passage of the Bills because they deliver important safeguards for financial advice consumers.
Referring to the opt-in amendment, ISN CEO, David Whitely, said: “This dual approach delivers protection for consumers and the opportunity for the financial planning industry to evolve into a respected profession, an objective which is supported by industry super funds.”
In contrast, the Association of Financial Advisers’ (AFA) Richard Klipin said tricky, eleventh-hour politics had blighted the reforms.
“Side deals negotiated by sectors of the industry with vested interests amount to tricky politics,” Mr Klipin said. “They represent poor process, poor governance and poor transparency – all of which spell poor outcomes for consumers and the advisers who serve them.”
It demonstrates that the Government has played favourites and has not listened to the industry
“We are disappointed at the outcome and sceptical about the merits of this ambiguous deal. It demonstrates that the Government has played favourites and has not listened to the industry,” he added.
riskinfo readers also had their say, with numerous comments posted on our site. Some expressed their concern and disappointment with the FPA for making the deal, with one reader calling it a “member grab”.
Others offered their congratulations to the FPA for its efforts to make financial planning a recognised profession:
“Well this is actually a great result for those who aspire to belong to a true profession. Opt-in was always a disaster waiting to happen. I say well done FPA.”
Still more readers said it was too soon to determine whether the amended opt-in rules were a positive or a negative for the industry, as the details were yet to be finalised…
“Frankly, the cynic in me suggests that unless opt-in rules or similar are incorporated into an Association’s Code of Conduct, then ASIC won’t offer relief. I think it’s a bit early for everyone to be jumping for joy and sending messages of heartfelt congratulations.”
In related news, the Self-Managed Super Fund Professionals’ Association of Australia (SPAA) said it would modify its own member Code of Conduct to ensure its members are exempt from the opt-in obligation.
“The FoFA reforms will result in the raising of standards across the financial planning profession which is a positive step to boosting consumer confidence in advisers,” said SPAA CEO, Andrea Slattery.
“SPAA will work closely with ASIC on the modification of our own Code of Conduct, to ensure it meets the standard required.”
A “class of persons” does not necessarily only refer to members of some industry body. Authorised Representatives of a particular AFSL licensee are “a class of persons”. The amendment potentially opens the door for dealers groups to adopt an internal “code of conduct” for their AR’s through which to gain class relief from opt in.
What a farce this is turning out to be. The government views Opt-in as essential for consumer protection, but NOT if the adviser is a member of a particular professional body? Yet more of the anything-but-level playing field. Why single out particular professional bodies, especially when the “favoured” one had as members the principals of Storm, the very people who, arguably, triggered this whole issue in the first place? How can a law exclude members of a body from abiding by the law, when membership of said body is voluntary?
Given election political polling at Federal level, Labor is doomed, the Coalition will be returned to power next year and will have a mandate to abolish opt-in and to exterminate “Industry Funds which are run only for the benefit of members” including, no doubt Bernie Fraser and Garry Weaven and their fellow travellers (trustees, directors, etc) all of whom are enjoying “soft beds” at the expense of the whole community! Has anyone encoutered an Industry Fund Trustee who is knowledgable, competent and conscientious about their duties?
Fortunately the voting public of Australia will very soon be able to vote out the incompetent ninnies aka the government just like the Queenslanders just did with Anna! I can’t wait…
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