FoFA Amendments: Take the blinkers off – what’s really good for consumers?

AFA CEO Brad Fox says it is time for financial services commentators to take the blinkers off and focus on what is really good for consumers.

“It is time for the misleading and vested interest rhetoric around amendments to the Future of Financial Advice reforms to be corrected in favour of a real and demonstrated commitment to an outcome that will help more Australians enjoy a substantially self-funded retirement,” he said.

Mr Fox said that Australia has to face the stark reality of a rapidly ageing population looking down the barrel of retirement. “Faced with this emotional, stressful transition from building wealth to wondering how long it will last, nearly all retirees seek professional financial advice,” he said. “They want that advice to be personal, they need it to be affordable and they want to have a relationship with an adviser who will be there for them throughout their retirement. They don’t want advice from a call centre operator over the phone.”

Mr Fox said that reports that amendments to FoFA reforms mean the legislation is being ‘ripped up’ are ridiculous. “FoFA is being enhanced, not watered down,” he said. “The Best Interests Duty remains substantially the same and the core elements are still there – in particular the ban on commissions on investments and superannuation. The amendments improve FoFA because they provide greater certainty and clarity; they are good for consumers.”

Mr Fox called for an end to what he said is a squabble over Australia’s retirement pool. “We are calling on all industry participants to step up and focus on the people who really own the money – the mums and dads of Australia,” he said. “It’s an absolute fact that we have an ageing population. It’s an absolute fact that we are about to experience the greatest intergenerational wealth transfer of all time. Baby boomers are retiring in their thousands. They do deserve protection and they will have it – under a Best Interests Duty that is both pragmatic and effective – if the FoFA amendments are passed.”

If the FoFA amendments are not passed, he said the courts will ultimately decide what the ‘catch-all’ provision (Part g) of the Best Interests Duty means. “This needs to be fixed now and it needs to be fixed by the FoFA amendments.”

Mr Fox also said that clients and advisers have been portrayed as being on opposing teams. “In fact, they are on the same side – clients can walk away from an adviser any day of the week. If they are not satisfied they can leave. As a professional community, we put a lot of energy into making sure that clients are at the heart of everything we do and the media portrayal that advisers and clients are on opposite sides of this debate is rubbish. They are inextricably linked,” he said.

If the law makes it too hard for advisers to do their job Mr Fox said Australia risks a whole generation of people missing out on advice and the value that it delivers. “If the red tape is too hard to cut through, people will move into retirement without the personal financial advice they need in order to secure a substantially self-funded lifestyle in retirement. That’s what’s at stake. The FoFA amendments need to be passed.”