Planners reject FOFA
More than 90 per cent of financial planners responding to a Money Management survey believe that the Government’s current Future of Financial Advice (FOFA) changes will have a negative impact on their businesses.
The survey, conducted over two days last week, revealed overwhelming opposition to the key elements of the FOFA changes - with particular emphasis on the imposition of two-year opt-in arrangements and a total ban on commissions on the sale or life risk products within superannuation.
Nearly 80 per cent of respondents to the survey described themselves as being independent financial advisers.
What little support existed for the FOFA changes was strongest among those respondents describing themselves as being bank-aligned or connected to an industry superannuation fund.
The only element of the FOFA proposals to extract an element of support from planners was the introduction of a 'best interest' requirement, with 42 per cent of respondents nominating it as capable of having a beneficial effect on their businesses.
Asked which of the FOFA proposals would have the most negative impact on their businesses, 58 per cent of respondents nominated the two-year opt-in arrangements, while 31 per cent nominated the ban on commissions on life risk products sold within superannuation.
Despite 42 per cent of the respondents suggesting that the 'best interest' requirement would have a beneficial impact on their businesses, 92 per cent said they did not believe the financial planning industry would be improved by the introduction of the FOFA changes.
What became clear from the survey was that a significant number of respondents did not believe the organisations representing the industry had done a good job in dealing with the Federal Government and appropriately influencing its approach to FOFA.
When asked which organisations had best represented their interests with respect to FOFA, just over 50 per cent nominated the Association of Financial Advisers (AFA), while around 30 per cent nominated the Financial Planning Association.
There was no support among respondents for the efforts of the Financial Services Council.
A common theme in the comments attaching to some survey responses was that the FOFA changes were largely inspired by the industry superannuation funds and that, ultimately, the changes would not achieve the outcomes being pursued by the Government.
A small number of respondents argued that the changes would create a divide in the industry with financial advisers providing comprehensive advice while the banks, major institutions and industry funds would provide single-issue advice.
AUTHOR
Mike Taylor
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.
