Second FOFA tranche gives scope to argue on volume rebates
Financial planning groups will have the scope to prove some volume rebate arrangements are not conflicted, under the legislation introduced by the Government as the second tranche of its Future of Financial Advice (FOFA) changes.
Both the bill and attached explanatory memorandum make it clear that while all volume rebate arrangements will be regarded as conflicted, it will be open to those involved to prove otherwise.
The explanatory memorandum states: "Where a volume-based payment of this kind is made, section 963L requires the party alleged to have paid or accepted conflicted remuneration to prove that the payment is not conflicted remuneration. That is, if that party has paid or received a volume-based benefit of the type described, it will have to demonstrate that, in the circumstances, the benefit was not in fact conflicted remuneration."
The Financial Planning Association (FPA) has welcomed elements of the second tranche of the legislation, with chief executive Mark Rantall saying the organisation supported the majority of the measures in banning soft dollar benefits because they mirrored existing FPA standards set by an industry benchmark.
"However we do not agree that location should be a factor - the FPA believes that if a financial planner can participate in a legitimate professional development conference, it should be irrespective of whether it is in Australia or overseas," he said. "The FPA also has a concern with the definition of Group Risk and believes the current definition within the legislation could cause some unintended consequences and costs for consumers as a result.
"As a whole, the FPA believes that the reforms announced in FOFA Tranche 2 are supportive of the financial planning profession, our members and all Australians," Rantall said.
AUTHOR
Mike Taylor
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