Assistant Treasurer Josh Frydenberg has announced that a number of refinements will be made to improve the “operation of FOFA and alleviate a number of unintended consequences, most of which have arisen since the laws were legislated”.
A statement from the assistant treasurer explained that the agreed refinements will be progressed through a new regulation, before 1 July 2015, and will:
• Clarify that advice provided to an employer about default superannuation funds is considered to be providing a financial service to a retail client
• Make FOFA consistent with other parts of the Corporations Act by including a wholesale and retail client distinction
• Update FOFA to treat non-cash payments, such as travel money cards, consistently with other simple financial products
• Ensure that the modified best interests duty applies in respect of advice on basic banking products and/or general insurance, even where provided at the same time as advice on the provision of consumer credit insurance (which attracts the full best interests duty)
• Make the conflicted remuneration exemption that applies to basic banking products and general insurance applicable to benefits relating to consumer credit insurance where an employee or agent of an authorised deposit-taking institution provides advice on any or a combination of these three products; and ensure that benefits provided by a retail client to their financial adviser are exempt from conflicted remuneration provisions.
Consultations continue on additional refinements that may be progressed in the latter half of the year, including an extension and alignment of the “periods of time that an adviser has to send an opt-in renewal notice and a fee disclosure statement to their client to 60 days, to facilitate adviser compliance”.
Why were these “refinements” not put in place originally? Shows that it was a knee jerk policy and one badly worded for legislation. Start again from a PRACTICAL perspective as even 60 days is not always possible given many retirees are on holidays for months at a time and no email and certainly no care about signing and returning what is seen as an irrelevent piece of paper. Opt Out would have been far more effective and practical. and cheaper administratively and thus for the client.