More FSR refinements imminent

Parliamentary Secretary to the Treasurer Chris Pearce has stated that he intends to make further refinements to the Financial Services Reform Act (FSR) over the next 12 months.

In an address to the G100, an association representing senior finance executives, Pearce said: “While not fundamental in nature, it is clear that some more refinements are warranted. I am committed to seeing these implemented this year.”

According to Andrew Conway, a senior ministerial adviser, the FSR refinements announced in December last year were the first tranche in a two-part process.

These initial changes included the introduction of a Record of Advice, which could be provided instead of a Statement of Advice in cases of ongoing client relationships, so long as no significant change had occurred to an individual’s circumstances.

The refinements this year will impact on current disclosure requirements, although Conway was unable to confirm details.

“In short, the further refinements are still being worked on. In the first round, which we did last year . . . we really had a very long list of items for refinement, and basically the Parliamentary Secretary had to put a line through them and say ‘we can do everything above the line, and then we need more time to look at everything below the line’.”

He added: “The real objective is to restore the original intent of the legislation, which is to enable all the players to function without a feeling of being swamped by an over-analysis of the regulation, because there has been a tendency really to take the most risk adverse position.”

CPA financial planning policy adviser Kath Bowler, who is currently in talks with Treasury, said the association hoped that the new reforms would include changes to the definitions around general advice.

She said: “It’s unclear and it doesn’t provide sufficient scope in its current form to allow it to be used effectively.

“Equally of concern is the ability of planners to give, for want of a better term, some pro bono advice without triggering the FSR requirements.”

Bowler added that she hoped the Government would relax its stance on the use of the word ‘independent’ by financial planning groups. “I don’t think the intention was to stop anyone from using it, but to stop the abuse of the term.”