FPA/IFSA release disclosure guidance

The Financial Planning Association (FPA) and the Investment and Financial Services Association (IFSA), have released a finance industry guide on rebates and related payments.

The guide sets out standard definitions and provides a summary of the rebate practices and disclosure requirements at different stages of the advisory and sales process.

Both the FPA and IFSA are hoping common terminology and higher disclosure standards will allow consumers to better understand what they pay for and raise the image of the industry.

“The use of common terminology and higher disclosure standards by financial planners will enable consumers to better understand what they pay for and any remuneration their financial planner may receive,” FPA chief executive Kerrie Kelly said.

The new guidelines take effect from January 1, 2005 and members will be given six months to transition into the new disclosure regime.

“Consumers should know the total fees that they will be required to pay and how they are paid. Without this knowledge, they are unable to evaluate the advice they receive,” Kelly said.

The guidelines represent the second stage in a three part rollout of the collaborative FPA/ISFA process to improve the clarity and transparency of payment and remuneration practices, the .first phase completed back in August with the release of the Code of Practice on Alternative Remuneration in the Wealth Management Industry.

The third and final stage is the establishment of principles to help members manage areas where potential or perceived conflicts of interest may exist.