While the Governance Institute – an industry association representing chartered secretaries, risk managers and governance advisers – opposes the government’s proposed amendments to FOFA, it has acknowledged that under the current system financial advice professionals are exposed to “unreasonable consumer claims”.
“Governance Institute argues that the ‘catch-all’ provision should be retained but with fine-tuning to insulate advisers from unreasonable claims,” said a statement issued yesterday, reflecting on the organisation’s submission to Treasury.
“This would take the form of an amendment to clarify that the onus of proof rests with the consumer to prove rather than simply allege that the adviser in fact failed in their duty to act in the client’s best interest.
“That is, consumers would need to demonstrate that the adviser should reasonably have known about a particular circumstance and disregarded it, or failed to take reasonable steps to act in the best interests of the client.”
Governance Institute chief executive Tim Sheehy said this clarification of an “onus of proof” will protect “honest and competent advisers” while keeping the consumer protection mechanisms of the FOFA legislation.
