Sinodinos Announces FoFA Amendments


The Government has announced it will amend the ban on conflicted remuneration for life insurance inside super so that it will only apply in circumstances where no personal advice has been provided.

Senator Arthur Sinodinos

The Assistant Treasurer, Senator Arthur Sinodinos, today released a highly anticipated package of reforms to the Future of Financial Advice (FoFA) legislation. Among the amendments is a change to the ban on commissions for life risk insurance products held inside super.

Going forward, the ban on conflicted remuneration will only apply to cover which is provided inside a default (MySuper) superannuation fund. Commissions on life insurance products inside super for which personal financial advice has been provided will not be considered ‘conflicted remuneration’.

The Senator also confirmed the Government would remove the retrospective application of the fee disclosure requirement, so advisers will only need to provide an FDS to clients who entered into an advice arrangement post 1 July 2013 (the FoFA commencement date).

There are 14 amendments in total, including the following:


The Government will remove the opt-in requirement completely, so advisers will not be required to seek their client’s commitment to proceed with advice services every two years.

Best interests duty

The best interests duty will be changed so the ‘catch-all’ provision (s961B(2)(g)) no longer applies. The Senator said this would provide advisers with certainty that they have satisfied all their obligations under the duty.

Scaled advice

Clients and advisers will be permitted to explicitly agree on the scope of financial advice to be provided, whilst ensuring advice is still appropriate for the client.


The Government will amend the existing grandfathering provisions, that exempt certain benefits under pre-existing arrangements from the ban on conflicted remuneration, to allow advisers to move between licensees and to continue to access grandfathered benefits in certain circumstances.

Amendments will also be made to clarify the operation of the grandfathering arrangements with respect to the sale of financial planning businesses, superannuation to pension switches under multi-product offerings, and employed advisers becoming self-employed advisers.

…the FoFA reforms will save the financial services industry an estimated $90 million

“Consistent with the Coalition’s election commitment to reduce compliance costs for small business, financial advisers and consumers who access financial advice, the Government will undertake a package of amendments to improve FoFA,” Senator Sinodinos said.

“Our consultation with industry indicates that the Abbott Government’s FoFA reforms will save the financial services industry an estimated $90 million in implementation costs and reduce annual compliance burdens by an average of approximately $190 million per year.”

To read about the industry’s reaction to the proposed changes, click here.


  1. Finally some common sense has prevailed All those who stood by the individual advisers who some have spent a lifetime building not only their practice but the relationships with their client should take a bow well done AFA and others.

  2. Perhaps ASIC needs to have a look at its own conflicted model. In other words it should look inside itself and stop trying to encourage greater levels of needless scrutiny in an endeavour to increase its own levels or remuneration and power grab.

    ASIC did nothing about Storm when it was the sole supervisor under Storms licence.

    Perhaps if all advisors were under a bank or insurance companies licence rather than their own licence with ASIC there would be less clients out of the even of a future storm event.

    I believe most Banks and Insurance companies control their own and related advisors quite well even in a conflicted environment.

  3. A slice of common sense, well done Arthur.

    Perhaps Arthur can now turn his attention to the provision of advice from some bank advisers who invariably recommend their own product to the absolute detriment of their client. Some bank recommendations that have come across my desk for hindsight have been mind boggling. How does this practice fit in with Best Interest Duty?

    Next on the list are poor or no advice direct life product providers.

    Lets keep the common sense changes going and jettison the mindless bureaucratic crap that stifles the advice and sales process and only adds to underinsurance in Australia.

  4. Martin, it seems that many enforcable undertakings and actions for unprofessional, biased or just bad advice, has also come from advisers directly linked to Banks, so I think the problem lies more with the plethora of legalistic jargon that confuses and enables lazy or unscrupulous advisers to BS clients into making decisions based more on the advisers personality.

    I am yet to meet a client in the 26 years I have been a adviser, that understands our industry jargon, so they make their decisions based more on “hope” that what they have been told, relates to the PDS and SOA provided to them.

    The Liberals have realised and at last some sanity is prevailing, though there is a lot of work to do to demystify and dejargon what we do for our clients.

    ASIC and all the Insurance Companies need to simplify their regulations, policy wordings and processes to enable all Australians to better understand what it is they are purchasing and to enable all parties to work together in a cohesive manner.

  5. Could this be the BEST CHRISTMAS present in the past 5 years for all of us that have had these unwarranted & counter-productive chains put around us, because of the sins of those that are not even in the Industry any more?

    I have had over 31 years in this Insurance & Superannuation Industry & the recklessness of the FoFA regulations over the past 2 years has destroyed the confidence & backbone of what used to be a well-respected & sort-after career.

    CONGRATULATIONS to the Coalition Govt for restoring HOPE & SANITY into our Industry that will hopefully now attract a lot more younger advisors, so that our clients & their children will have access to their Life Insurance Broker, as they have had for generations before, so that they will have the best available Personal Insurance Plans for when they need them the most – at claim time.

  6. Three cheers sanity prevails at last after 40 years in the industry i wanted to be able to still service my clients without extra burdens put on me by a govt who didn’t understand small business,let alone our industry they couldn’t even work out who was steering their ship.
    I run a country practice with a lot of travel all the rearrangements by the abbott govt will give me more time to look after more of my clients than I could under the mob we had before well done a good xmas present

  7. A nice start. When will ASIC stop blaming advisers for product failure? It’s high time that investors bear the brunt of their own investment decisions. After all advisers can only rely on PFS and research when recommending products. I thought ASIC were responsible for PDS’s not advisers??

  8. 2014 will now be better for all Australians, congratulations to the Federal Liberal-National Government, the more level the playing field the better!
    Every financial product advice service provided: be it by a bank employed adviser, an industry fund, a direct sales person, or a non bank / independent adviser Must have the same paperwork/electronic requirements and procedures to follow & abide by – if an SoA is needed by advisers in Industry for loans, risk insurance or financial planning – then every person who provides like advice Must also follow the same procedures and have to provide the same level of detail be it large or small. Just because a bank adviser may only advise on that banks products or a direct insurance sales person can only provide info/advice on a limited range of product, they should all have to provide the same level of info, paperwork, PDS, SoA’s etc as a AFSL or non bank adviser – ie a true level playing field means the same level of detail & time required for each and every adviser providing advice on each area.
    Then when that level of detail is sufficient to enable the client to make an informed decision – then we have a more efficient client service be the SoA 4,10, 20 or 50 pages long – the shorter the better as it stands more chance of being read & absorbed.
    Further, the biggest problem with investment failure is product / regulation failure not adviser failure – MIS investments were a classic example where the ATO & the ASIC actively worked to either to destroy the industry or didn’t help the investors to get the right result. Millions of dollars were lost to the ATO revenue when the MIS products they originally approved with product rulings were attacked in a case the ATO ultimately lost and thus began the start of the end for MIS investors. Once the GFC took hold and new investors slowed, then Timbercorp and later Great Southern and then others fell to the banks demanding back the long term debt provided due to short term technical insolvency, further necessary investment ceased and the products (mostly trees) which everyone knows and accepts take time years say 10+ to grow to eventually be harvested to provide a return. If the ASIC & the ATO had supported the investors and organised management of the long term MIS rather than letting the receivers & insolvency firms run rampant on behalf of the bank then investors may have gotten some decent returns. Even now the trees are being plundered by legal & court fees and the individual investors are being let down and trampled on and offered lees than firewood value for their investments.

  9. Great common sense being showed by the Liberal-National government – perhaps the same logic can now be applied to other areas including the car manufacturing market in Australia. My economics teacher told us 35 years ago that Australia has a car market of 500,000 to 600,000 cars pa and to be competitive a manufacturer need to make 500,000 cars – yet we had 4-5 car makers (Holden, Ford, Mitsubishi, Toyota & …) – no wonder they didn’t make it – anyone can tell that 1 car maker has a chance even without any exports. so why don’t we combine the manufacturing plant, skills and infrastructure now going to waste all in one and have a single productive & profitable Australian car manufacturer who with some logic on the industry and the union sides can make a go of it?
    There are many more areas where we need great government leadership – we should not be growing wool in Australia, shipping it raw to japan to wash, and elsewhere to weave into fabric, and then send it to Europe to make fine suits – it should all be done in Australia!
    Likewise with iron ore & bauxite & even aluminium – it should be refined and treated here and turned into machinery & cars here then exported as a final product also.
    Why do we sell and transport stud animals or their progeny or even live cattle & sheep – we should treat and export the finished product and not give centuries of fine breeding away likewise with stud horses – sell the geldings/steers/wethers but not the studs.
    if we lose our manufacturing skills & plant eg Qantas sending engine & safety servicing skills overseas – what happens when we have the next war & Australia gets invaded if we can’t or don’t make car & truck engines anymore? We get taken over that’s what happens, thats why we had to keep grain corp and cheese, dairy & other production in Australia and why we should never sell our land outright – sell it on 50 year lease then when that’s over the land returns to Australian government hands – that solves the unfunded super liabilities and other budget problems in the long term and long term planning 50-100 years+ is what our government should engage in. We all know our cities and large regional towns will grow so let us plan where the best place is for the rail roads and future dams & airports – right across the country – and set aside the land and places now for all our futures.
    Canberra should have been built at Alice Springs and the radial transport road & rail links spread out from there like a union jack from one end of this great land to another.
    Shop locally in Australia – buy Australian made & owed products – and what your local town & country thrive! Time to retrun to work.

  10. As a 27 year veteran of the industry (adviser, fund management BDM, license holder and responsible manager) it is my observation that the only people threatened by FoFA, are those sitting on large books of legacy business providing big licks of revenue. These advisers’ idea of service is an annual christmas card.

    This is a big win for lazy advisers and a slap in the face for clients who deserve a financial mentor to guide them through life.

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