FOFA and its dates need amendment: AFA
Future of Financial Advice (FOFA) reforms will require thoughtful amendments if significant unintended consequences are to be avoided, while the stated implementation dates are also too early, according to the Association of Financial Advisers (AFA).
With some reforms, including the ban on product commissions and asset-based fees, due to come into effect on 1 July 2012 - around nine months away - this will not afford enough time for all industry participants to efficiently introduce the measures, according to AFA President, Brad Fox.
"In the interests of consumers, we call on [Assistant Treasurer and Minister for Financial Services Bill Shorten] to review these key dates," he said.
The second tranche of the FOFA reforms was released this week, but together with the first tranche and the Stronger Super reforms, significant pieces of the jigsaw are still missing, he said.
The reforms look likely to lead to significant market concentration in the area of financial advice and significantly increase the cost of personal financial advice for every day Australians, he said.
"We believe the generic one-size-fits-all approach perpetuated by the industry funds movement and by the MySuper reforms will ultimately lead to greater consumer disengagement," Fox said.
The AFA supports transparency in relation to all fees associated with financial advice and superannuation, but Fox expressed concern that hidden advice fees - in the form of 'management fees' - may remain in industry super fund and MySuper products, meaning some super fund members will be paying for personal financial advice they may never access.
The proposed legislation will also make it too expensive for corporate super specialists providing financial advice education, benefits and services to members of corporate super funds to continue to provide these services, Fox said.
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