CPA remains firm on FSR proposal
CPA Australia has welcomed the Government’s proposals to reduce costs for investors seeking financial advice, but believes it still has not gone far enough.
In August last year, the Parliamentary Secretary announced the reforms arising from the April 2006 Corporate and Financial Services Regulation Review Consultation Paper would be achieved through the Simpler Regulatory System Bill, which is intended to be introduced into Parliament this year. As a result, the Government has released the Corporate and Financial Services Regulation Review Proposals Paper.
Under proposal 1.2, the requirement to provide a Statement of Advice (SOA) in instances where professional advice is given without charging a fee and does not involve a product recommendation has been removed. In such cases, a Record of Advice (ROA) will still be required.
CPA Australia financial planning policy adviser Kath Bowler welcomed the proposal, believing the separation of financial planning advice from product advice was a good start.
“The new category of sales recommendation is useful in that it distinguishes between product recommendations and advice,” Bowler said. “However, it’s vital that this new category not create an unfair advantage where sales recommendations can be perceived as advice.”
CPA Australia believes further measures need to be implemented if financial advice is to be readily accessible. These include widening the scope for individuals who can offer non-product specific advice, providing an environment that’s more conducive to limited advice, and excluding public forums from the definition of financial product advice.
“Like most in the industry, we don’t support the proposal that superannuation should be excluded from the $10,000 threshold recommendation for when an SOA is needed,” Bowler said.
“If the Government really wants to support consumers in establishing good super strategies — such as combining super fund, selecting insurance, qualifying for co-contributions — then the exclusion of super must be removed.”
In November last year, the Parliamentary Secretary to the Treasurer released the Corporate and Financial Services Regulation Review Proposals Paper. The proposals include suggestions to simplify and improve regulation in areas of financial services, company reporting obligations, auditor independence, corporate governance, fundraising, takeovers and compliance.
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