Some of the Future of Financial Advice (FOFA) reforms announced recently contain elements that lack logic and appear to be working against the spirit of the proposed legislation, according to ANZ Wealth advice and distribution general manager Paul Barrett.
Specifically, Barrett was referring to the provisions about general advice pertaining to employees located in bank branches. To this end the regulations stipulate banks cannot incentivise their staff to give general financial advice to customers.
“I think a lot of the intent around FOFA is good, but if you think about a couple of policy objectives, one was to improve access and affordability of advice,” he said.
“Bank branches are perfectly positioned in every suburb of Australia to provide simple product and advice solutions to clients who would otherwise not get it.
“So this rule around incentivising branch staff is going to potentially be counter to that [objective]. The argument can be mounted that the regulation doesn’t say you can’t provide general advice, you just can’t incentivise the provision of general advice. The reality is, of course, if you don’t incentivise or if you don’t pay someone to provide a service, then it’s hard to get them to provide the service.”
He said further discussion over this regulation was needed in the industry in order to work toward the best outcomes for consumers, but he conceded the definition of what activities constituted incentivising had yet to be determined.
Another anomaly he pinpointed in this area lay in the fact the prevention of incentivising the provision of general advice did not extend to advice on insurance.
“I found that unusual and that’s one I imagine will get addressed in time,” he said.
