Time for solutions to FOFA concerns

The industry needs to move beyond telling Treasury why opt-in requirements and banning volume rebates won’t work and start offering solutions to the problems, according to Snowball Group managing director Tony McDonald.

McDonald said that the financial services industry was just as responsible as Treasury for coming up with solutions to the issues of opt-in requirements, volume rebates and different advice levels.

For example, the debate over whether rebates to advisers from platforms create conflict in advice could be solved by platforms offering a payment directly to the dealer group itself without the payment passing to the adviser, McDonald said. The rebates could be used to build a better dealer group for advisers.

Holistic advice, event-driven advice and intra-product advice was another area where the industry could explore solutions for Treasury to look at, McDonald said.

An “intra-product advice” category should be created in place of intra-fund advice, which would apply to both advisers and superannuation trustees in the interests of a level playing field, McDonald said.

Regulatory guides could be created to deal with each style of advice to give better regulatory guidance, he said.

McDonald stressed that those solutions were not necessarily his views, but simply to stimulate debate and were works in progress.

“I think Treasury is at a point where they’re saying ‘We hear all the issues [the industry is voicing], but what’s the answer?’ There is no point in just saying this won’t work and that won’t work — [come up with] the solution,” McDonald said.

It was up to the industry to come up with ideas to ensure that the reforms wouldn’t be implemented in a way that ran counter to the intention of the reforms, he said.

McDonald also warned that there were still pockets of people who were trying to thwart the reforms, either because they had vested interests or because they were afraid of change.