The Government has released the legislation and regulations for the proposed changes to the FOFA reforms for consultation.
Assistant Treasurer Arthur Sinodinos has stated that his Government is supportive of the principles of FOFA but has blamed the previous government’s reforms claiming they were “unwieldy, burdensome and unnecessarily complex”.
On releasing the legislation, Sinodinos, has said that the proposed changes would reduce compliance costs and remove red tape from the financial services industry.
Research by Rice Warner Actuaries in 2013 found that the previous government’s FOFA laws would reduce the average cost of financial advice from $2,046 before the reforms to $1,163 after the reforms by 2026-27 and double the provision of financial advice in Australia.
The reformed draft includes legislation and regulations regarding: the removal of the opt-in requirement, streamlining the annual fee disclosure requirements, changes to the conflicted remuneration rules regarding life insurance inside superannuation, an amendment to the best interests duty to allow for scaled advice, an exemption of general advice from the rules regarding conflicted remuneration, amendments to grandfathering arrangements to allow for adviser movements.
Sinodinos confirmed that, “the interim regulations will be repealed once the legislative amendments have been passed, while those amendments best addressed via regulations will remain in place.”
Consultation on the legislation and regulations will be open until 19 February 2014, but the Government has announced many of the changes will be made by regulation rather than legislation. This means that there will be no scrutiny by a parliamentary committee.