Key accounting bodies back FOFA's opt-in arrangements

Australia's three major accounting bodies have backed the two-year opt-in arrangements contained in the Government's Future of Financial Advice arrangements, describing them as "an important pillar of the FOFA reforms".

In a submission lodged with the Parliamentary Joint Committee reviewing the FOFA legislation, the joint accounting bodies - CPA Australia, the Institute of Chartered Accountants in Australia, and the Institute of Public Accountants - described opt-in as an initiative that would "assist clients who are actively involved with their financial future assess whether the services they are receiving reflect value for money before they decide to renew an ongoing fee arrangement".

"It will also protect new clients who have become disengaged over time and clients who are not yet fully engaged in the client/financial planner relationship from paying ongoing fees where they receive little or no service," the PJC submission said.

"We believe this protection mechanism should be afforded to both existing and new clients.

However, the compromise of requiring the provision of an annual fee disclosure statement to all clients will assist in ensuring existing clients still have the opportunity to make an informed decision if they are receiving value for the ongoing fees they are being charged," the submission said.

It claimed the process would build greater trust and further develop the financial planning industry's progress towards being recognised as a profession.

"Importantly, transparency and honesty are essential elements in a trusted relationship between a financial planner and a client. Implementing these mandatory ongoing disclosure requirements will ensure that these principles are upheld in all client engagements," the submission said.

The joint accounting bodies described opt-in as "an opportunity for those financial advisers who do not already regularly engage with their clients and seek their ongoing consent to charge advice fees to now demonstrate the real value of their financial advice".

"If the industry can begin to effectively communicate the benefit and value of seeking financial advice, the wider community will begin to understand these benefits and this may encourage more people to actively seek advice," the submission said.