Among the groups that are voicing opposition to the proposed changes to the Future of Financial Advice legislation are the country’s over-50s, and organisations that represent them. They are concerned that the proposed changes to FOFA, to reintroduce certain commission structures and kickbacks that had been banned under FOFA, would result in poorer advice and products being made available as they prepare for their retirement.
Consumer groups and parts of Australia’s A$1.5trn (£834bn, $1.4trn) superannuation industry have also announced their opposition to the proposed FOFA changes, according to reports in Australia’s media late last week. The superannuation industry is Australia’s mandatory, government-supported retirement system, which is partly funded by employer contributions.
“Freezing rules that were to be imposed within days [to amend FOFA], the Government said it would launch new consultations on changes to the way consumers are charged for financial advice on retirement savings and personal investments,” a report in The Age, a Melbourne daily, said on Friday.
The decision to freeze the planned rollback of key FOFA provisions was reportedly taken by Australia finance minister Mathias Cormann, who has taken over responsibility for the planned FOFA amendments in the wake of assistant treasurer Arthur Sinodinos’s decision earlier this month to stand aside.
As reported, Sinodinos, the Australian government official who was one of the main proponents of the FOFA amendment plan, announced on 19 March that he would step away from his Treasury post indefinitely, in the wake of revelations about his connection to a corruption inquiry in New South Wales.
The Future of Financial Advice Act had been one of a number of regulations targeted by the newly-elected prime minister, Tony Abbott, as part of a vow to cut A$1bn in red tape annually.
Shortly after it was elected, the Abbott Government launched a consultation with Australia's advisory industry on draft rules that would make it easier for advisers to receive commissions and other so-called “conflicted payments”, which had been banned by the signing into law of FOFA in 2011.
Advisers' group favours reforms
An association which represents Australian financial advisers, meanwhile, has expressed its surprise and disappointment at the furore over the plans to reform FOFA. According to a statement on its website, headed "Enough of the fairy tales", it said it was disappointed "at the delay in the release of the FoFA amendment regulations", although it said it welcomed the chance for the debate on the matter "to return to a facts-based discussion, rather than a rolling campaign of fiction and misrepresentation".
The statement lists examples of what the Association of Financial Advisers says are "emotive claims that have been made during the debate", which it said include "[the] claim that advisers will no longer need to act in the best interests of their clients"; that "commissions [would be] reinstated for financial advisers", and that "scaled advice is an opportunity to get clients to agree to a scope of advice and then deliver it to the benefit of the financial adviser, without the obligation to act in their client’s best interest".
