FOFA a failure until it lifts entry standards
The Future of Financial Advice (FOFA) reforms as they stand push affordable advice further out of reach without addressing consumer protection, largely due to their failure to lift planner entry standards, an accounting academic believes.
Without tackling planner education or industry expectations, the reforms miss "what many regard as the fundamental cause of the poor reputation of the Australian financial planning industry", according to the University of Queensland's associate professor in accounting, Julie Walker.
While she conceded the fee disclosure requirements, which could be reinstated after the rollback lost support, give consumers some protection, "this comes at a price".
"This protection also relies on consumers taking the time to read and understand the disclosures made by their financial planners. Financial planners can continue to give poor quality advice," she said.
"What will change is increased upfront fees and greater disclosure around these fees resulting in higher costs."
Associate Professor Walker said until education standards are addressed, the flaws in the planning sector will remain.
"Until industry entry standards are lifted, FOFA will not deliver accessible financial advice for the Australians who need it.
"Absent an urgent rethink by the Abbott government on FOFA, after last week's events it seems the goal of access to affordable and trustworthy financial advice for Australian consumers is more elusive than ever."
Recommended for you
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.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
