FOFA set to double compliance burden
From 1 July this year, planners will have to divide their client base into pre-FOFA and post-FOFA clients, according to Madison Financial Group head of compliance Cheyenne Walker.
The danger is that compliance costs will be driven up because planners will have to have two compliance processes in place, Walker said.
"There are two sets of rules now. How are practices going to make it easier to treat all of their clients post-FOFA?" she asked.
It may end up being easier for practices to treat all of their clients as 'post-FOFA', Walker said.
In addition, the rules around the grandfathering of platform payments are unclear, she said.
"If you've got a new client with new money, does that come under the grandfathering? I don't think it does. So even from a practical point of view - from licensee to product provider to issuer to platform - are there going to be two systems for that process as well?" she asked.
From a licensee's perspective, when it comes to the opt-in rules there will have to be two compliance processes in place to deal with authorised representatives who adhere to different codes of conduct, Walker said.
"If I've got advisers who are [Financial Planning Association] members or [Association of Financial Advisers] members who have got two different codes of conduct, how do I as a licensee compliance [department] deal with that?" she asked.
"If I say 'this is what you've got to do because you're authorised with us' but that's in breach of the code from one of the industry organisations, that's going to be another issue," Walker said.
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