Despite the announcement of amendments to the Future of Financial Advice (FOFA,) uncertainty remains about whether planners should be completing Fee Disclosure Statements (FDS) by the end of this month.
Midwinter managing director Julian Plummer said many planners who used his group's software were extremely busy processing FDSs before the 31 January deadline to notify clients of their financial advice fee arrangements.
Plummer said these advisers were unsure of where they stood. Some were taking the Australian Securities and Investment Commission (ASIC) at its word, while others had received legal advice that they should produce FDSs for all clients until the amendments had been made law.
Under the FOFA amendments, FDSs should be supplied to clients signing with a planner from 1 July 2013, with ASIC stating in December last year that it was taking "a facilitative approach to the FOFA reforms until mid-2014".
ASIC also stated it would not take action against breaches of those parts of the FOFA legislation under amendment unless it found "deliberate breaches of the new requirements or failure to make reasonable efforts to comply".
However, Holley Nethercote partner David Court said much of the confusion around FDSs had been eliminated before the amendments were announced by planners moving to comply with the FOFA legislation.
"There have been two camps with this issue. Those who took a risk that there would be a change in government and the announcement of FOFA amendments — and those who acted first and made the changes required under FOFA.
"We found that most advisers chose to take the latter path, and the only area of concern was the engagement date they had to nominate for existing clients where that date was not already recorded."
Court said his planner clients wanted to avoid operating under two systems and two regimes and had moved their businesses to comply with the pre-amendment FOFA requirements.
"The FOFA amendments could be considered an unintended reward for not acting, which turned out to be a valid tactic for those who did not act and relied on the Federal Government's statements on FOFA while in Opposition," Court said.
