The Industry Super Network (ISA) has expressed concerns over the newly released draft changes to the Future of Financial Advice (FOFA) legislation, calling the Government to carefully measure the impact on consumers.
The call comes as the Federal Government released draft amendments to the FOFA reforms yesterday, giving the industry three weeks to lodge their submissions.
ISA chief executive officer David Whiteley expressed concerns that the proposed changes could bring conflicts of interest back into financial advice.
He pointed to what the ISA called “uncontested research” from Rice Warner, which found the previous Government’s FOFA laws would increase consumer savings by $144 billion in the next 15 years, and would halve the cost but double the access of financial advice.
Whiteley also pointed to a recent Newspoll survey, which found 90 per cent of consumers agreed there should be laws that require financial planners and advisers to only provide advice that is in the best interests of their clients.
“Australians want impartial financial advice that is in their best interests and not tainted by sales commissions, ongoing advice fees, volume rebates or other types of incentives paid to financial planners by banks and other institutions,” Whiteley said.
“Industry Super Australia is concerned that these proposed changes will re-permit the payment of conflicted remuneration and re-open the debate about whether a financial planner is an impartial adviser or a sales rep.”
ISA urged the Government to fully assess the impact on consumers and of any proposed changes as part of the due diligence.
The Government has prepared an options-stage Regulatory Impact Statement (RIS) for the amendments, which details the effect of FOFA on both industry and consumers.
In it, the Treasury notes consumer groups were unlikely to support the proposed package of amendments, as they believe that any changes to FOFA will compromise consumer protections.
“Despite these concerns, many of the measures which were originally introduced by FOFA will remain, including an amended best interests duty and the ban on conflicted remuneration,” the RIS stated.
The Government stressed that the information gathered through consultations would be used to refine the RIS into a final details-stage RIS, which will be completed prior to the finalisation of legislation.
