Government announces major FoFA reforms

The Assistant Treasurer today (20 Dec 2013) announced reforms to the Future of Financial Advice (FOFA) legislation.

Although it supports the principles of FOFA, the Government considers the previous Government's reforms went too far. Key elements of the Government's amendments include:

  • Removing the 'opt-in' requirement
    The Government will remove the need for clients to complete unnecessary paperwork in order to continue their arrangement with their adviser.
  • Annual fee disclosure
    The Government will streamline the existing requirements to ensure that the requirement to provide fee disclosure statements only applies to new clients from 1 July 2013.
  • Removing 'catch-all' from the best interests duty
    The Government will amend the best interests duty to ensure that advisers can be confident that they have provided compliant advice to their clients.
  • Scaled advice
    The Government will amend the best interests duty to explicitly allow for the provision of scaled advice.  The changes will enable advisers to agree on the scope of advice to be provided with their clients, whilst ensuring that the advice is still appropriate for the client. This reform will enable consumers to receive "one-off advice" from financial advisers.
  • Exempting general advice from conflicted remuneration
    The Government will ensure that the ban on conflicted remuneration only applies to personal financial advice. Applying the ban on conflicted remuneration to general advice risks limiting the availability of this type of advice and unnecessarily burdens industry by capturing staff not directly involved in providing advice to clients.
  • Grandfathering
    The Government will amend the existing grandfathering provisions to ensure that advisers can move between licensees whilst continuing to access grandfathered benefits. 

A detailed summary of the Government’s amendments is in the Assistant Treasurer's media release