Platforms call for FOFA deadline extension
Major platform providers have called for parts of the Future of Financial Advice (FOFA) reforms to be delayed due to lingering uncertainty with respect to grandfathering and opt-in arrangements.
Companies working in the financial services sector will have until 1 July 2012 to make final adjustments to their business models, IT and compliance systems, but BT's head of platforms Chris Freeman said the industry still hasn't got clarity in terms of what FOFA will bring.
"We've got the FOFA announcement, but we're still waiting to see where we land with transition arrangements and also grandfathering," Freeman said.
Colonial First State (CFS) and IOOF have been particularly vocal on this issue, with both institutions lobbying the Government - directly and through industry associations - to extend the FOFA deadline.
IOOF general manager of distribution Renato Mota said the Government was underestimating the amount of change platform providers need to deal with in terms of systems and processes.
"Six months, which is the timeframe we're dealing with for some of the change - and we're yet to find out the finer details for some of these components - is really an unrealistic timeframe," Mota said.
Uncertainty around opt-in, transition arrangements and grandfathering of fees and volume rebates presents one of the major challenges for platform providers, according to CFS general manager for product and channel development Peter Chun.
But CFS is also hoping for parts of FOFA to be delayed to 2013 so the final deadline can coincide with the introduction of MySuper.
"It's actually incredibly impractical having two sets of changes being forced upon existing clients; if there is just one start date, it would be a much more customer-friendly outcome," Chun said.
Mota agreed that synchronising implementation dates of some of the FOFA proposals and MySuper would make sense.
"As a platform you cannot look at each of the regulatory regimes in isolation," he said. "To get the best possible outcome you need to look at all the regulatory change in aggregate and try to implement something that's hopefully going to cover more than one of those requirements."
Developing opt-in solutions presents another one of the challenges for platforms, because the current FOFA draft does not address many possible scenarios, according to OneVue's chief executive officer Connie McKeage.
"If the client doesn't opt-in within a specified period of time, you've got to turn off the revenue for the financial adviser; but if you turn it off and the client comes back and says 'I didn't mean to do that', can you then go back and pay retrospectively to the adviser?" McKeage said.
"It's a very complex scenario to try and implement in this market - and with such ambiguity remaining, with the time ticking."
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