The Coalition Government has honoured its pre-election promise of amending the problematic reforms to the FOFA legislation.
Arthur Sinodinos, the Assistant Treasurer has announced that his Government has resent a number of amendments to parliament amending the FOFA legislation, including the removal of the opt-in requirement and the streamlining of fee disclosure statements. The amendments are consistent with the Coalition’s campaign of reducing red tape that they released during their 2013 election campaign. Recently the FPA chief executive Mark Rantall had described the reforms as “unnecessary paperwork” and a “burdensome layer of red tape to industry.”
A statement released by the government has conformed their support for the FOFA but indicated that, “the previous government’s reforms went too far, creating unnecessary complexity, imposing significant burdens on industry and reducing the availability and increasing the cost of advice to consumers.”
The Coalition’s proposal considered that the requirement to provide fee disclosure statements only applies to new clients from 1 July 2013 and a statement read: applying this requirement to existing clients is overly onerous as the fee disclosure arrangements are significantly more costly to apply to pre-1 July 2013 clients.
The government has also indicated that it will also modify the best interest duty to explicitly allow for the provision of scaled advice and Assistant Treasurer Arthur Sinodinos has said that, “the changes will enable advisers to agree on the scope of advice to be provided with their clients, whilst ensuring that the advice is still appropriate for the client.”
Furthermore, the amendments will also limit the ban on conflicted remuneration only to personal financial advice and while these changes have been welcomed by The Financial Planning Association, FPA chief executive Mark Rantall commented that “there is still room to improve.” He added, “we feel there is more to be done to streamline the fee disclosure statement process and we will continue to work with Government and Treasury for improvements in this area.”