The principal architect of the review that spawned the Future of Financial Advice (FoFA) reforms, former Minister for Financial Services and Superannuation Bernie Ripoll, and the man who proposes to amend key elements of the FoFA legislation, Assistant Treasurer Senator Arthur Sinodinos, have spoken publicly about their respective views.
Both appeared at last week’s 2014 SPAA SMSF National Conference and presented two starkly diverging assessments of the aims and likely ramifications of the proposed amendments.
Sinodinos said there has been “a lot of urban myth making and mythologising in recent times about some of the changes”, and he referred to comments earlier in the conference by Sir Anthony Mason that if “some aspect of the best interests duty – say, the catch-all provision – is to be wound back, it would be a serious mistake to think that a financial adviser is under no duty to act in the interests of the client”.
Sinodinos added that it is impossible to “guarantee against another collapse, whether it’s as a result of the GFC or something else, or [fraud], or all the rest of it”.
“But what we can do is try and have a robust regulatory regime, which encourages the best possible advice being provided and then it’s really up to the market from there,” he said.
Ripoll countered by referring to a press release issued by Sinodinos before the election in which he stated: “The Government will ensure that the ban on conflicted remuneration only applies to personal financial advice.”
“However, when the draft regulations were released, an exemption for personal advice was included when part of a balanced scorecard approach,” Ripoll said.
“The drafting of that particular change has enough loopholes in it to drive a truck through.”
Ripoll called for “a proper parliamentary debate open to full scrutiny rather than trying to force change via a Ministerial edict and regulation”.
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