Advice costs rise 33% post-FOFA
The Financial Services Council (FSC) has estimated that the cost of providing financial advice has increased by 33 per cent as a result of the Future of Financial Advice (FOFA) changes.
In a submission to the Senate Economics Committee yesterday, the FSC said it had arrived at the 33 per cent figure after conducting a survey of financial planners and cited, as an example, that the cost of holistic advice was $3,040 pre-FoFA and that, post-FoFA the cost had increased to $3,751.
Further it said that advisers running independent businesses were likely facing higher costs because they might not be able to access scale efficiencies.
However it said that if the Federal Government's proposed amendments to FOFA were passed by the Parliament a third of these increased costs would be saved, amounting to $235.
The FSC submission made clear that it believed the FOFA legislation introduced by the former Labor Government had moved too far away from the sensible bi-partisan approach advocated by the original Joint Parliamentary Committee (the Ripoll Review).
It said experience under the FOFA regime was showing a fall in consumers numbers seeking holistic advice but certainty in the law regarding the best interest duty and scalable advice would support growth in scaled and affordable advice for more Australians.
"The FSC repeatedly stated throughout the legislative process that the package would not meet its objectives and that FOFA needed to revert to the Ripoll recommendations," the submission said. "Let us be clear. The FOFA legislation was fundamentally inconsistent with the principles of wider accessibility and affordability without conflicts and mistrust."
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