Adviser groups are hitting back at claims the Government’s proposed FoFA amendments will weaken consumer protections.
While the Assistant Treasurer’s announcement was welcomed by the majority of the financial services sector, some members of the superannuation industry and consumer action groups were critical of the proposed changes. Both Industry Super Australia and the Australian Institute of Superannuation Trustees argued that the Coalition’s amendments would reduce consumer confidence in financial advice.
This assessment was also backed-up by consumer group CHOICE, who said the changes to the best interests duty would mean consumers were not protected from poor quality advice. The group also labelled the financial advice reforms ‘rollback’ as a step in the wrong direction, a view that was echoed by some industry and media commentators.
Taking the advice industry’s detractors to task, the Financial Planning Association’s CEO, Mark Rantall, described the reaction of certain sectors of the superannuation industry as “predictable”, adding that they were “using misinformation to once again depict financial planners in a negative light”.
…consumer protection laws remain intact and at world’s best standard
“Our position on these regulatory matters is quite clear: consumer protection laws remain intact and at world’s best standard. Combined with this robust legal foundation, professional financial planners who have individually subscribed to a binding code of professional practice not only have nothing to fear, they have everything to gain in this new environment.
“We also want to place on the record the simple fact that our profession operates in a world-leading environment governed by robust consumer protection laws and an unrivalled voluntary Professional Code of Practice that has its number one principle of acting in the client’s best interest.”
According to the AFA, much of the commentary around the impact of the FoFA changes has not correctly addressed the issues necessitating the changes, nor accurately expressed the impact on consumers.
AFA Chief Operating Officer, Phil Anderson, said the stories that suggest the industry is facing a wholesale rollback of FoFA are incorrect. “The stories that talk about the best interests duty being scrapped, or that advisers no longer need to prioritise the interests of clients over their own interests, these are just incorrect.”
He said while he did not expect the Government to conduct a widespread awareness campaign, it was important that factually correct messages were delivered to consumers.
He also highlighted the importance of getting the regulatory balance right:
…it makes sense to have a look at the impact of legislation
“There are a couple of industry groups that have been left more exposed than others, and corporate super advisers are certainly a classic case of that. Corporate super advisers provide a very important service to members, employers and trustees, and we’d like to see them having a strong future. The same goes for non-aligned licensees, who are also a thoroughly important part of the market and we’d like to ensure that they continue to succeed. So I think that it makes sense to have a look at the impact of legislation on those particular groups, and whether what is in place delivers an appropriate and just outcome.”
Synchron Director, Don Trapnell, also defended the proposed amendments, saying they were developed in consultation with the industry.
“We are very pleased to see the incoming Government make amendments to FoFA, in particular grandfathering, a matter of priority,” Mr Trapnell said.
“Senator Sinodinus has taken the time to consult with the industry, including Synchron, and understands the impact of FoFA on advisers. He gets it. The introduction of sensible, workable amendments heralds the return of a free financial advice market.
“Some elements of FoFA were absolutely necessary but in our opinion, the Labor Government tried to use a sledgehammer to crack a walnut,” he said.
