FOFA carve-out for time share commissions
The Federal Opposition has urged the Minister for Financial Services and Superannuation, Bill Shorten, to introduce further amendments to the Future of Financial Advice (FOFA) legislation following what it describes as a backdown on commission-based payments around time share.
Commenting on the changes confirmed by Shorten, the Opposition spokesman on Financial Services, Senator Mathias Cormann, joined with the Shadow Minister for Tourism and Regional Development, Bob Baldwin, to welcome the changes on time share remuneration, but said the FOFA legislation remained unnecessarily complex and in large parts unclear.
"It will increase red tape and costs for both business and consumers, while reducing choice, competition and diversity across the financial services industry," they said.
Shorten announced on Friday that the time-share industry would be "carved out" from the ban on conflicted remuneration imposed by the FOFA changes "allowing the industry to continue to remunerate its employees through sales-based commissions".
He said the exemption would be achieved through regulations to the FOFA changes and reflected the fact that the "time share industry was never the intended focus of FOFA".
However, the minister said other aspects of the FOFA changes, including the obligation to act in the best interests of clients would, continue to have full application to the time share industry where sales staff provide financial advice to clients.
Shorten said the decision on the carve-out had been the result of extensive consultation with the time share industry.
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