The Financial Planning Association of Australia (FPA) today condemned the disallowance motion of the amendments to the Future of Financial Advice (FoFA) Regulations.
To be tabled in the Senate today by the Opposition and cross-bench Senators, the disallowance motion threatens to remove the Regulations put in place on 30 June this year which amended the FoFA reforms.
“This will have a catastrophic effect across the entirety of the financial services industry, one of the largest employers of people in Australia,” said Mark Rantall, FPA CEO
“If passed, this disallowance motion will continue five years of uncertainty for financial planners and their clients which commenced when the FoFA process began under the Labor Government.
“The industry has been adhering to these Regulations for nearly five months. This disallowance motion has the potential to put the entire financial services industry immediately into breach of the law.
“The Coalition’s amendments contained in the Regulation ensured the FoFA reforms remained intact in a sensible way that reduced red tape and maintained vital consumer protections.
“The original FoFA reforms created unnecessary red tape and compliance driven processes that did not achieve the then Minister’s stated aim of improving the quality of advice for consumers.”
The original FoFA requirements, such as opt-in and retrospective Fee Disclosure Statement (FDS), created back end red tape that did not improve client outcomes or services for clients. Clients agree to set Terms of Engagements with their financial planner, a contract that binds the planner to service agreements but allows the client to legally opt out of the arrangement at any time. Fees and services are properly disclosed upfront under the amended FoFA reforms.
