Minister for finance Mathias Cormann’s announcement last Friday was immediately welcomed by the Financial Services Council (FSC), the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA).
In his announcement, Mr Cormann went out of his way to highlight two “key propositions” that “have generated most of the public debate” about the FOFA amendments – both of which he said were “wrong”.
The first is the “inaccurate assertion that we were somehow abolishing or significantly watering down the best interests duty for financial advisers”; and the second is “an equally inaccurate assertion that we are re-introducing commissions for financial advisers”.
FSC chief executive John Brogden said there is “significant change” in the government’s announcement – stemming from the recommendations of the recent Senate committee inquiry into FOFA – that deals with the fears that commissions could be reintroduced via the amendments.
“For the last three months and before that period there was a very high expectation that commissions would come back, and there was quite a strong backlash from community about that,” he said.
“The government has clearly changed its position. It has defined commissions and it has banned them,” he said.
When it came to the changes to the best interests duty – that is, the removal of the ‘catch-all’ step – Mr Brogden was defiant.
“We think it’s good, and we think the scaremongering that’s being pushed around by industry funds and others over the last couple of months has to stop,” he said.
“People are being unnecessarily scared about what the provisions of these changes are and it’s time a bit of truth was put back in the debate,” said Mr Brogden.
FPA chief executive Mark Rantall agreed there has been a lot of “scaremongering” and “significant disinformation” about the best interests duty.
“We argue very strongly that there still is a BI duty and it hasn’t been watered down,” said Mr Rantall.
Association of Financial Advisers chief executive Brad Fox explicitly warned advisers and consumers to “brace” themselves for “mistruths and false claims” about the amendments in coming weeks.
“We have seen blatant mistruths, as recently as this week, on the FOFA issues and it is likely that we will see them again now,” said Mr Fox.
“The industry super lobby will again attack these reforms because in most cases they do not benefit when members of industry super funds see a financial adviser,” he said.
