FSC’s FOFA legal advice counters ISA
The Financial Services Council (FSC) has obtained legal advice on the Government's changes to the FOFA legislation and its impact on client best interests which it argues effectively counters legal advice obtained by Industry Super Australia (ISA).
While the ISA is relying on advice provided by its preferred legal firm, Melbourne-based Arnold Bloch Liebler, the FSC has obtained advice from a NSW Senior Counsel, Ian Jackman, which it says confirms proposed amendments to the best interests duty in the FOFA amendments will continue to require a financial adviser to act in the best interests of their client and will not reduce consumer protection.
FSC chief executive John Brogden said the FSC had received advice from Jackman and lawyer Gregory Drew to the effect that "the removal of the ‘catch-all' phrase in the best interests provision of the Corporations Act would not compromise the protections provided by the best interests obligation".
He said the two lawyers had also advised that scalable advice is allowable and the manner in which it is drafted does not enable an adviser to avoid acting in their clients' best interest.
"The legal advice is clear. The proposed amendments do not reduce in any way a financial adviser's legal requirement to act in the best interest of their clients," Brogden said. "Consumers will not be impacted by the amendment being proposed to the best interests duty. In fact, removal of the catch-all phrase will provide clarity to consumers on what they can expect from their adviser.
"We also have clarity that scalable advice is permissible under the proposed FOFA amendment. Scalable advice is imperative if the FOFA reforms are to meet their objective to increase the number of Australians who receive advice."
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.
