Opt-in opponents don't understand FOFA
Sydney University has weighed into the debate on the Government's proposed Future of Financial Advice (FOFA) reforms, with associate professor from the Sydney Law School Joanna Bird saying those who argue opt-in is unnecessary don't understand the reforms.
"There is nothing in the proposed ban on conflicted remuneration, where advisers receive commissions for products they sell, or the new best interests duty for advisers that will prevent advisers taking fees out of their clients' investment products on an ongoing basis," Bird said.
"Periodic disclosure of fees will also not help the large number of disengaged clients," she added.
Failure to retain opt-in would erode the wealth of Australians, who would wind up paying for little or no financial advice on an ongoing basis, she said.
"Those who see a financial adviser may soon forget - if they ever fully comprehended - they have agreed to pay their financial adviser a regular advisory fee out of their investment products and that this will happen every year until they actively stop it or sell their investment product," she said.
Bird acknowledged the measure would increase financial advisers' costs but said this had to be weighed against the cost to consumers.
And those who argued the measure was unnecessary failed to understand there is nothing in the proposed ban on conflicted remuneration or the best interests duty that will prevent financial advisers taking fees out of their clients' investment products on an ongoing basis, she said.
According to Sydney University, Bird is an expert on financial regulation and has prepared written submissions on FOFA on behalf of consumer groups, and has previously worked for the Australian Securities and Investments Commission.
AUTHOR
Staff Writer
Recommended for you
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.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
