Enough of the fairy tales: AFA calls for factual FoFA debate

The Association of Financial Advisers (AFA) has expressed disappointment at the delay in the release of the Future of Financial Advice (FoFA) amendment regulations, but welcomes the opportunity for debate to return to a facts-based discussion, rather than a rolling campaign of fiction and misrepresentation.

While the AFA recognises the need for a pause, AFA CEO Brad Fox says, “We do wish to emphasise the importance of a timely solution for the grandfathering issue that is currently preventing advisers from moving from one licensee to another.”

Mr Fox says while waiting for the outcome of the Parliamentary Inquiry into the legislation, as released on 19 March 2014, and for the Minister to review the regulations, “We now have a window of opportunity for the reintroduction of facts and integrity into the FoFA Amendments debate.”

Emotive claims that have been made during the debate include:
– An incorrect claim that advisers will no longer need to act in the best interests of their clients
– An incorrect claim that scaled advice is an opportunity to get clients to agree to a scope of advice and then deliver it to the benefit of the financial adviser without the obligation to act in their client’s best interest
– An incorrect claim that the amendments will lead to another ‘Storm Financial’ type collapse during the term of this Government
– An incorrect claim that commissions are being reinstated for financial advisers

Mr Fox says the repetition of these erroneous claims has significantly impacted what is being reported in the media.  “It is surprising that sensible and pragmatic amendments have generated such vigorous debate and broad exposure,” he says.  “It is clear that the debate is now based upon what people think of the erroneous claims, rather than a detailed and informed analysis of the specific amendments.”

The AFA believes it is unfair and unreasonable to generate deliberate confusion and uncertainty when financial advice is so critical to Australians achieving their long-term financial security. “Now is the time to question why and how this has happened and to consider the vested interests at play,” Mr Fox says.   

Australians have been exposed to a relentless campaign of misinformation, exaggeration and scaremongering and, in the interest of consumers, Mr Fox says the time has now come to test these claims. “The campaign of misinformation and extremist claims might work in the interests of certain vested interest groups, however the systematic destruction of consumer confidence in financial advice is highly damaging to the financial future of Australians and Australia. It’s time for the fairy tales to end and for all parties to act in the genuine best interests of consumers.”

The AFA has released a summary of facts about the proposed amendments to FoFA and what they really mean for consumers.

The AFA has also responded specifically to Industry Super Australia (ISA)’s claims that the FoFA amendments allow the return of 10 different commissions (please see Appendix B)