FPA chief executive Mark Rantall has rejected suggestions amendments to the federal government’s Future of Financial Advice (FOFA) reforms would result in a membership boon for the advice body.
Rantall told InvestorDaily such assumptions were ill conceived, with the opt-in amendments providing opportunities for others in the industry to improve the professionalism of the advice industry.
“There has been no mention anywhere that it would only be the FPA that would be approved,” he said.
“We would be expected that we would be in a good position to be approved but that doesn’t mean others wouldn’t be approved as well.”
FPA’s rival advice body, the Association of Financial Advisers (AFA), has been working closely with ASIC over the development of a new professional code of conduct for its members.
“As part of the working group on professionalism, ethics and codes, the AFA has been developing its principles of practice which is the AFA’s approach for members around governance, standards, education and disciplinary procedures,” AFA chief executive Richard Klipin told InvestorDaily.
“The AFA is currently in discussions with members and key stakeholders.”
Klipin said the advice body is working on a range of initiatives with the corporate regulator.
“We will be part of the future around building a code and having it approved by ASIC,” he said.
According to a report from Investment Trends, only 18 per cent of financial planners do not belong to a professional association.
Planner Business Model Report July 2011 found the FPA held greatest membership, with 41 per cent of planners stating they are a certified financial planner member of the FPA.
The report, which surveyed 1396 financial planners, also found a strong majority of financial planners or 88 per cent are in favour of restricting the term ‘financial planner’ to only those who meet clearly defined levels of qualifications and professional standards.
The amendments, announced yesterday by Minister for Financial Services and Superannuation Bill Shorten included significant exemptions to the opt-in rule.
Under the amendments, opt-in, which requires planners to re-sign contracts with their clients on a regular basis, will not be required where a planner is a member of a professional body.
It will also not be required where the advice body has an approved professional code of conduct, and where ASIC has provided a class order excluding them from the requirement.
Commenting on the amendments, Klipin said: “We’re still waiting to see what the vote [on FOFA] delivers in the House [of Representatives].
“The AFA has called opt-in poor policy since the outset, on the face of it looks like for professional advisers that there may be a way to not have opt-in as part of their future practice landscape, however we’re yet to see the details and clearly there is always a lot of devil in the details.
“There’s also an issue around a lack of transparency and a lack of process around last minute deals being done without any ability to consult and consider, model and understand the consequences of such amendments.”
Klipin said industry and government need to remember that FOFA is a whole package, not just opt-in.
“As we’ve called previously and in fact recommended by the Senate Economics Committee that the various regulatory impact statements are conducted and released and we call on the Minister and we would welcome the government following the Senate Economics Committee’s recommendations on this,” he said.
Rantall said it was too early to make definitive comments around the makeup of the final FOFA bill.
“Clearly we haven’t seen the full detail of those amendments yet. We’re waiting to see what the legislation looks like when it passes,” Rantall said.
“However removing opt-in has been one of our platforms for many months, we’ve never supported opt-in. We wanted opt-in removed if possible. If we can remove opt-in by having an approved code that elevates the need of having opt-in then that would be something at least will get us to a point of not having to comply with an opt-in regime.”
Rantall said the FPA’s preference would be to remove opt-in altogether.
“No doubt discussions are still taking place. and we await the final reading and passing of the bill,” he said.
“We look like we’ve gained some concessions and we’re hopeful that those discussions will still continue and we look forward to seeing the final make up of the bill passed or not passed which is still an option at this stage.”
