The Financial Services Council has obtained new legal advice which confirms that the proposed changes to the best interests duty will not reduce consumer protection.
Commercial counsel Ian Jackman SC and Gregor Drew were engaged by the FSC to analyse the Government’s proposed Future of Financial Advice (FoFA) amendments. In their advice to the FSC, Mr Jackman and Mr Drew state that the removal of the ‘catch-all’ step from the safe-harbour provisions would not compromise the protections provided by the best interests obligation.
FSC CEO, John Brogden, said: “The legal advice is clear. The proposed amendments do not reduce in any way a financial adviser’s legal requirement to act in the best interest of their clients.”
Mr Brogden also pointed out that the legal advice provided by Mr Jackman and Mr Drew highlights why the amendment to the best interests duty is necessary.
“Consumers will not be impacted by the amendment being proposed to the best interests duty. In fact, removal of the catch all phrase will provide clarity to consumers on what they can expect from their adviser,” he said.
According to Mr Jackman and Mr Drew, given the scope of the other safe harbour steps, it is “difficult to conceive of any other steps” that the provider might take in order to meet the best interests duty.
“Our advice confirms these small technical amendments do not change the substance nor the intent of the FoFA reforms. That is, to improve the quality and quantity of financial advice and to make it accessible for all Australians,” Mr Brogden concluded.
There is still one issue to be addressed-the banks new found capacity to join the pirates of the direct selling enterprises and flog rubbish products via bank tellers ( not bank advisers ), under the guise of the wonderful ASIC invention, GENERAL ADVICE
I will bet the banks will already have on tap a number of life risk products which can be sold by tellers which are very similar to the direct-selling income protection products. No chance of a claim !!
You know the drill – pre-existing illness exclusion clauses and no Partial disability benefits, all sold with ASICs blessing, but ignoring the education requirements placed on us. In time, there will be the same higher level of claims and declinations, accompanied by 45% lapse rates. And those lapses will be added to IFA lapses to justify changes to responsibility periods for IFA advisers.
Many of my fellow advisers have whinged for years that the Labor Government and its mates went many steps-to-far with FOFA. Well that some complaint can now be lodged against Abbott.
The removal of Opt-In and clause (g) make sense
Accepting the lobbying of the banks to allow tellers to sell IP does NOT make sense – it is definitely anti-consumer.
And BTW, I don’t care if the tellers get commission
All in direct competition to insurers owned by those same banks who sell quality products with the same badge through IFA advisers. Consumers must be confused
Where the hell were our professional bodies when the banks slid in Abbotts back door after the election ? When will they learn not to trust ANY politician
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