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Financial advice playing field to be levelled under FOFA
The Federal Government's latest round of reforms on financial advice have received largely positive reactions from the superannuation sector, but only time will tell as to how the changes will impact advice within super.
Alterations to the Future of Financial Advice (FOFA) reforms include the expansion of limited advice to ‘scaled advice’, which could be provided by trustees, financial advisers or accountants.
In order to introduce scaled advice, the government would need to amend the existing reasonable basis for advice obligation in the Corporations Act to make it clear that the obligation is commensurate to a client’s needs when providing advice.
If this were done, the Australian Securities and Investments Commission (ASIC) has said it will look at revoking the current class order relief which exempts intra-fund advice from the normal rules surrounding the reasonable basis for advice.
The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) has praised the proposed introduction of scaled advice for its ability to create a level playing field for all those acting in the space.
SPAA chief executive Andrea Slattery said the scaled advice model also recognises that accountants who advise on self-managed funds may not wish to make recommendations to clients to purchase specific financial products.
The Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos was pleased with the inclusion of scaled advice, but for different reasons.
Vamos said it was positive for the government to recognise that scaled advice was already a key part of the services provided by super funds to members.
AUTHOR
Ashleigh McIntyre
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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