FOFA to remain soft-boiled until mid-2014
The implementation of the Future of Financial Advice (FOFA) looks set to remain "medium soft" until 1 July 2014, according to Shadow Treasurer Mathias Cormann.
The Australian Securities and Investments Commission (ASIC) confirmed to Cormann in front of a Senate Estimates committee last week that it would be taking a "facilitated approach" to FOFA for one year after the 1 July 2013 implementation date.
ASIC commissioner John Price pointed out there is normally a "bedding down" period when new legislation comes in.
"Obviously we are keen to adopt an even-handed approach, unless it is clear that people are acting wilfully or recklessly in terms of their compliance with the law," said Price.
In particular, ASIC has signalled that it is willing to compromise in regards to fee disclosure statements, with three 'no action' clauses included in a regulatory guide published on the topic last month.
ASIC commissioner Peter Kell told the estimates committee that his organisation would "not take a technical approach to compliance" if advisers make their "best endeavours" to work out how clients' fee structures have been structured in the past.
Specifically, the regulator will allow planners to reset the 'start date' for existing clients if it is impractical to find out when the first piece of written advice was delivered.
Financial Planning Association general manager for policy Dante De Gori said ASIC was displaying a "commonsense approach".
By allowing advisers to reset the start date for many of their existing clients, practices will be able to "streamline" when their fee disclosure statements go out, rather than having to send one out every week, said De Gori.
Association of Financial Advisers (AFA) chief executive Brad Fox also welcomed the regulator's accommodating stance. However, he said that many of the advisers he spoke to were displaying "nervousness and even a bit of frustration" at the levels of preparation by their dealer groups for the "1 July 2013 kickoff".
"When we start talking in depth about fee disclosure statements - which are only four and a half months away from starting - a number of [advisers at the AFA roadshow in Sydney last week] were blank-faced, saying 'gee, we haven't heard anything'," he said.
But in fairness to dealer groups, some of the regulation in regards to fee disclosure statements only came out last month, Fox added.
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