FOFA disallowance a significant step-back for industry: Chan & Naylor
Labor's move to block the Government's Future of Financial Advice (FOFA) reforms will stifle the financial services industry and could render it a basket case on the international stage, a legal expert warns.
Chan & Naylor Wealth Planning partner, David Hasib, warned that the Senate's decision to block the Government's FOFA reforms will make financial advice "extremely expensive" for consumers, forcing them to seek advice from large institutions, while strangling independent dealers, whom he said had been left with no products to supplement their revenue in the face of growing business costs.
"Implementing Labor's proposed FOFA rules will significantly stifle the financial services industry with the potential to rendering it a basket case on the international stage," he said.
"Should the previously proposed reforms go ahead on 1 July next year then this will make providing financial advice extremely expensive for the consumers, which ultimately will force ordinary Australians to opt for the more affordable but vertically integrated, and ultimately conflicted, advice channel.
"Ironically this latest development will leave the very people that FOFA aimed to help now seeking financial advice from those institutions that could ‘clip the ticket' multiple times."
However, Slater and Gordon consumer advocate and professional negligence lawyer, Ben Whitwell, said the Senate's voting down of the Government's reforms was "a win for common sense".
"The FOFA reforms were introduced to protect every day investors and essentially require the industry to take a long hard look at itself," he said.
"The attempt by the Coalition Government to wind back these reforms was risible and a ludicrous policy risk that would have left consumers exposed."
AUTHOR
Nicholas O'Donoghue
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
