The FPA has predicted the federal government may restructure the fiduciary duty requirement under its Future of Financial Advice (FOFA) reforms and instead adopt an adviser conduct-style obligation.
The association’s acting chief executive, Deen Sanders, said the change would be likely to occur as the government’s current fiduciary requirement was unlikely to carry through into legislation.
Sanders said the FPA, through its newly-formed FOFA taskforce, would combine a number of the government’s reform consultation streams into areas it believed to be significant.
“The sorts of things that we’re going to be focusing on are things like fiduciary and consumer protection, and realistically the fiduciary piece we expect is likely to change just because we don’t think the government is able to carry through a true fiduciary sense into legislation, so we’re likely to see changes around that, that perhaps becoming some sort of adviser conduct-style requirement rather than a fiduciary requirement,” he said.
“We want to make sure there is clarity in the whole of value chain remuneration, and this incorporates the volume bonus concerns.
“We want to focus on things like affordable accessible advice that picks up the issues of intra-fund, it picks up the issues we’ve had with the removal of barriers to efficient advice. There will be dedicated consultation and taskforce activity on the expert advisory panel, which is about professional standards and education in financial planning.”
He said as the FPA already had a strong connection with government, the taskforce would enable the association to specifically identify how the FOFA reforms would be dealt with in significant detail.
“Some of the problems with industry in the past is when it does tend to take the argument to government that it wants to take to government without necessarily pitching it in the way government is able to receive it,” he said.
The major concerns for the association and its members are the government’s new opt-in rules, fiduciary duty, remuneration, intra-fund advice and the negative connotations of financial planners.
“Our strategy in relation to the consultation of FOFA reforms is to get it right the first time. A key feature of our taskforce is that we want the legislation drafted correctly before it’s enacted,” Sanders said.
“Because, frankly, financial planners end up wearing it at the bottom end all the time, when we think there are failures at other levels of the value chain that haven’t done their job properly, and the consequence is that clients are always out of pocket and sue their financial planner,” he said.
