FoFA Roll-back 2014.
When the government unveiled the details of their FoFA overhaul days before Christmas, there was not a lot of media fuss. Few in the industry appeared to fully comprehend the potentially profound scope the changes would make.
Since releasing the exposure draft regulation on January 29, the noise surrounding the issue has been anything but quiet. The changes have come under intense scrutiny and evoked much commentary amongst industry professionals.
The main conversation centres on a fear that these changes will re-open the door to risky behaviour. In particular advice given by people who are either poorly trained or are conflicted by remuneration methods –
all valid issues for many vulnerable Australians who deserve to be protected. There’s no denying that the stakes are high given the complexity of many financial products and the need for untainted advice. In particular our ageing population given superannuation funds in Australia are now at $1.7 trillion.
More than ever, (a point reflected on with great passion at last week’s Partners’ meeting) it also re-enforces the value a ‘trusted adviser’ brings to the table. At FinSec we seek to ensure that you enjoy trust, control and confidence in the advice and service that we provide. As advisers we have a responsibility to put your interests ahead of our own at all times and go to great lengths to regularly test this. Unfortunately, some in our profession have not always adhered to the same standards.
So how will the FoFA changes affect you?
- Removal of the Fee Disclosure Statements (FDS) will allow us to reduce inefficiency and cost. We will retain the FDS fee transparency but will deliver this information through more appropriate communications e.g. client meetings.
- For many years our advice has been remunerated via a fee for service not based on sales. We have received commissions for insurance and lending products but have adopted a full disclosure approach to ensure transparency. We have never aligned ourselves with any one product or made remuneration deals with a product provider.
- Renewal of a client’s ongoing service agreement (OSA*) every 2 years – For those clients who have an OSA there is no longer a requirement to ‘opt-in’ to receive our ongoing services. We have always sought to meet clients face to face on a regular basis; it goes without saying that you can ‘opt-out’ of the relationship at any time.
- As a FinSec client the changes to FoFA regulations will have very minimal impact on your current services. We do however recognise the importance of ensuring you are aware of all the changes and what they mean. If you have any questions please don’t hesitate to call us on (08) 8357 7840 or email [email protected]
At FinSec we support the spirit of the original legislation and what was trying to be achieved, but we also welcome the recent amendments. The changes will ultimately reduce the cost and complexity of compliance.
You can download a full copy of the FoFA changes here
*The OSA is only applicable to new or existing clients who have changed the nature of their plan since July 1, 2013