Two key superannuation bodies have joined financial advisory associations and institutions in welcoming the later start date for mandatory application of the Future of Financial of Advice (FoFA) reforms.
Both the Self Managed Super Fund Professionals’ Association (SPAA) and the Association of Superannuation Funds of Australia (ASFA) believe the extension of compulsory FoFA implementation until July 2013 will benefit Australian advisors and consumers.
“The deferral date is a sensible approach given other major changes that are taking place in the financial services industry,” said Andrea Slattery, chief executive officer for SPAA.
“We are pleased to see that the Government is prepared to introduce the reforms in good time. The extension will be a relief to SMSF advisors, auditors and accountants as they will now have adequate time to prepare for the reforms.”
However Slattery said clarity was needed over whether the extension would cover all FoFA Peak Consultation Group (PCG) reforms (including the accountants’ exemption and auditor registration), and also the FOFA Expert Advisory Panel (EAP) issues such as competency standards and SMSF specialisation.
ASFA chief executive officer Pauline Vamos agreed that a later start date would help ensure a smoother implementation of the changes.
“This decision to move the mandatory application date to July 1, 2013 is extremely sensible given the different levels of impact on different providers,” she said.
“Final compliance will be aligned with MySuper, creating much greater efficiency for many providers.
“The FoFA reforms require significant and comprehensive changes to be made to what are, in many cases, mature and complex arrangements.
“But it also allows those who are ready to opt-in early to road test their systems. This again may provide great comfort to trustees and directors.
“Most super funds are able to provide, or provide access to, advice for their members. These services need to be reviewed as a consequence of Stronger Super intra-fund advice reforms as well as FoFA.
“More time to comply means funds can better perfect their processes; too fast may mean over-compliance, which ultimately leads to fund members not getting access to advice at lower costs.
“With so much happening in the industry at the moment and super funds also having to implement changes resulting from the Stronger Super reforms, this extra time will allow financial advisers and trustees to put themselves in a better position to be able to implement the required changes.”
ASFA had previously indicated that due to the large number of strategic and tactical decisions that would need to be made in relation to IT systems, processes and procedures, documentation and training, a delay in the mandatory application of the provisions would make sense.
“Having more time to implement the reforms will allow funds to produce better thought-out project plans, meet the challenges of staffing constraints, and prevent rushing to meet deadlines that could potentially increase the risk of error,” says Vamos.
