AFA applauds grandfathering resolution

The Association of Financial Advisers (AFA) applauds the swift response from both sides of Parliament in addressing concerns around Grandfathering following the Senate’s disallowance last week of the Future of Financial Advice (FoFA) Amendments Regulation package previously implemented by the Government.

Grandfathering is an essential mechanism that allows a self-employed financial adviser to change the licensee through which they are authorised to provide financial advice and retain the relationships that they have with their existing clients.

AFA CEO, Brad Fox says, “Following the disallowance last week, we sought urgent action from both the Government and the Opposition in order to deliver a solution to Grandfathering which would address the reduction in competition and the inability of a client to choose their financial adviser.

“Both the ALP and the Coalition were quick to acknowledge that the removal of Grandfathering when an adviser changes licensee was a significant issue likely to reduce competition and that addressing it was crucial to ensuring certainty for licensees, financial advisers and their clients. To see the issue resolved in this way reflects a sensible bi-partisan approach and we appreciate the efforts of both the Minister and Shadow Minister in moving so quickly given the circumstances.”

Mr Fox says the resolution to this issue announced today recognises the quality relationships held between most financial advisers and their clients and protects the right of the client to choose their adviser.

“Smaller licensees will be able to grow their adviser numbers, new licensees will be able to launch and larger licensees will need to continue to compete to retain their existing advisers,” he says. “Good judgment has prevailed and market competition is ensured through this pragmatic solution.”