{"id":14480,"date":"2012-02-29T22:23:29","date_gmt":"2012-02-29T12:23:29","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=14480"},"modified":"2012-02-29T23:43:04","modified_gmt":"2012-02-29T13:43:04","slug":"fofa-report-released-full-steam-ahead","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2012\/02\/29\/fofa-report-released-full-steam-ahead\/","title":{"rendered":"FoFA Report Released &#8211; Full Steam Ahead"},"content":{"rendered":"<p>&#8216;Full steam ahead&#8217; is the overarching message flowing out of the\u00a0much-anticipated report on the\u00a0Future of Financial Advice (FoFA)\u00a0reform Bills, with no\u00a0recommendation issued to\u00a0delay the\u00a0proposed 1 July 2012 commencement date.<\/p>\n<p>Released by\u00a0the Chair of the\u00a0Parliamentary Joint Committee on Corporations and Financial Services (PJC), MP <strong>Bernie Ripoll<\/strong>, the report (<a href=\"https:\/\/riskinfo.com.au\/news\/files\/2012\/02\/120229-pjc-fofa-recommendations.pdf\" target=\"_blank\">click here<\/a>) makes 15 recommendations about a range of reforms included within the proposed legislation.<\/p>\n<p><!--more--><\/p>\n<p>However, the PJC failed to reach consensus on the issues raised by the industry during its review, and as a result, the Coalition members of the Committee issued a secondary, dissenting report, with a contrasting set of recommendations (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2012\/02\/29\/coalition-calls-for-changes-issues-dissenting-report-on-fofa-bills\/\" target=\"_self\">Coalition Calls for Changes&#8230;<\/a>).<\/p>\n<p>While the recommendations contained in the PJC&#8217;s report do not automatically mean they will be adopted by the Government or even passed by Parliament, some of the key messages in the report, from the\u00a0adviser perspective,\u00a0include:<\/p>\n<p><strong>Opt-in and Annual Renewal Statements<\/strong><\/p>\n<ul>\n<li>That client opt-in regulations should\u00a0continue to underpin the basis of the FoFA reform agenda<\/li>\n<li>The proposed annual renewal statement, intended as a supplement to the two-yearly opt-in renewal notice, should be retained<\/li>\n<li>A rejection of the &#8216;opt-out&#8217; option proposed by many within the financial services sector because the PJC believes that the annual fee disclosure and opt-in obligations &#8216;&#8230; will make financial advice more transparent&#8217;<\/li>\n<li>Observations about the &#8216;vagueness&#8217; attributed to the various cost estimates of opt-in, where interest groups have adopted differing assumptions<\/li>\n<\/ul>\n<p><strong>Best Interest Duty and Scaled Advice<\/strong><\/p>\n<ul>\n<li>The Best Interest provisions should continue to form a basic plank within the FoFA reforms<\/li>\n<li>That the\u00a0Best Interest duty does allow for the provision of scaled advice<\/li>\n<li>A concession\u00a0in relation to the\u00a0wording of the Best Interest duty (as set out\u00a0in the Explanatory Memorandum) that\u00a0advisers should be\u00a0required to take into account the client&#8217;s &#8216;relevant&#8217; circumstances, rather than their &#8216;overall&#8217; circumstances<\/li>\n<\/ul>\n<p><strong>Conflicted Remuneration and Risk Products Inside\/Outside Super<\/strong><\/p>\n<ul>\n<li>No significant changes on recommendations regarding\u00a0conflicted remuneration issues<\/li>\n<li>Rejection of\u00a0arguments that commission remuneration for advisers should be allowed inside superannuation if personal advice is delivered, rather than being based on the type of\u00a0risk products being recommended<\/li>\n<li>A recommendation that ASIC conduct shadow shopping exercises post-implementation of FoFA to monitor whether conflicted advice is being provided on risk insurance outside superannuation<\/li>\n<\/ul>\n<p><strong>Overseas Training\/Conferences<\/strong><\/p>\n<ul>\n<li>A softening on restrictions in relation to overseas training events and conferences<\/li>\n<\/ul>\n<p><strong>Cost and Implementation Timing of the Proposed Reforms<\/strong><\/p>\n<ul>\n<li>Rejection of what the PJC refers to as &#8216;wild estimates&#8217; made about the potential job losses that will occur as a result of implementing FoFA reforms, and re-evaluation of previous estimates that were in part based on proposed reforms that no longer form part of the final package<\/li>\n<li>Rejection of calls for implementation delays, based mostly on the argument that the industry should have 12 or 24 months in which to prepare for annual fee disclosure requirements for new clients and biannual opt-in agreements.\u00a0 The PJC notes the &#8216;facilitative compliance approach&#8217;\u00a0recommended by ASIC towards infractions during this initial period.<\/li>\n<\/ul>\n<p>Addressing the\u00a0implementation\u00a0schedule, where 1 July 2012 continues to be the target commencement date, the PJC said:<\/p>\n<p>&#8216;<em>&#8230; the committee notes Treasury&#8217;s comment that it expects the draft regulations will be available for public consultation during March 2012. This will give the industry at least three months in which to comment on the draft regulations and know of their final form&#8230;<\/em>&#8216;<\/p>\n<p>The 200+ page report addresses each of the proposals contained within the first two tranches of the FoFA legislation Bills.\u00a0 It details the issue, its intent and the opinions expressed by industry contributors, both for and against.\u00a0 The PJC summarises its position on each issue before detailing its own key arguments.<\/p>\n<p><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2012\/02\/120229-pjc-fofa-recommendations.pdf\" target=\"_blank\">Click here<\/a>\u00a0to download the full\u00a0report from the PJC (noting the summary of 15\u00a0recommendations commences on page 13 of the PDF document).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8216;Full steam ahead&#8217; is the overarching message flowing out of the\u00a0much-anticipated report on the\u00a0Future of Financial Advice (FoFA)\u00a0reform Bills, with no\u00a0recommendation issued to\u00a0delay the\u00a0proposed 1 July 2012 commencement date. Released by\u00a0the Chair of the\u00a0Parliamentary Joint Committee on Corporations and Financial Services (PJC), MP Bernie Ripoll, the report (click here) makes 15 recommendations about a range [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[259,8,270],"tags":[],"class_list":{"0":"post-14480","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-breaking","7":"category-compliance-regulation","8":"category-remuneration"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/14480","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=14480"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/14480\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=14480"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=14480"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=14480"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}