In an update on amendments to the FOFA reforms, Piper Alderman senior associate Bill Fragos noted the changes do not "directly address the issue of competition [in financial services]".
"Indeed, it could be argued that the proposed changes enhance and reinforce the position of the big banks with respect to the wealth management sector," Mr Fragos said.
"There is no incentive in the proposed changes for big banks to reduce the fees charged to clients."
Despite claims by the government that FOFA will reduce the cost of financial advice, it is difficult to see how one could draw such a conclusion given the business models of the big banks, Mr Fragos said.
Furthermore, there are mechanisms within the amended FOFA regime whereby employees within big banks can be rewarded without receiving a commission, he added.
"The previous version of FOFA would have prevented financial advisers working in the banks to receive any reward whatsoever for suggesting their own financial products," Mr Fragos said.
Thus, the original version "may have led to greater competition".
"However, the proposed FOFA changes mean that financial advisers working in banks can provide general financial product advice and still get rewarded (so long as it is not a commission)," Mr Fragos said.
"Further, other employees are able to be rewarded for referring or selling financial products under general advice (again, so long as it is not a commission)," he said.
Things are not much better from a consumer perspective, Mr Fragos continued.
"The proposed FOFA changes do not appear to give consumers much reassurance that all advice they are receiving from a financial adviser is in their best interests," he said.
"Further, specific provisions could have gone further to address those issues which had led to the initial implementation of FOFA."
