Government announces further changes to FOFA
The government has stated that, although it supports the principles of the Future of Financial Advice (FOFA) reforms, the previous government “went too far, creating unnecessary complexity, imposing significant burdens on the industry and reducing the availability and increasing the cost of advice to consumers.” Consequently, it has announced that it will make further changes to the FOFA legislation. Key elements of the governments proposed amendments include( among others):
- Removing the ‘opt-in’ requirement ( so that advisors no longer need to seek their clients agreements to continue their arrangement with their adviser every two years)
- Annual fee disclosure- the existing requirements will be “streamlined” to ensure that the requirement to provide fee disclosure statements only applies to new clients form 1 July 2013
- Removing the catch-all provision form the best interests duty (so that advisers “can be certain they have satisfied their obligations under the best interests duty”), and amending the best interests duty to explicitly allow for the provision of ‘scaled advice’; and
- Exempting benefits relating to the provision of general advice from the ban on conflicted remuneration.
A detailed summary of the governments amendments is at Attachment A to the Assistant Treasurer’s media release.
ASIC Update on FOFA
In response to the Assistant Treasurer’s announcement of the proposed amendments to the FOFA legislation, ASIC has stated that it will not take enforcement action in relation to the specific FOFA provisions that the government is planning to repeal. For example, ASIC will not take action for breaches of current S.9262S of the corporations Act 2001, which requires fee disclosure statements to be provided to retail clients with ongoing fee arrangements entered into before 1 July 2013. ASIC will review and consult on its regulatory guides on FOFA once the proposed amendments have been made.
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