Speaking to an audience comprised primarily of industry fund advisers at the ISA-hosted Financial Advice in Super Symposium in Melbourne on Friday, Mr Collins said the proposed amendments to FOFA represented an “effective repeal of the best interests duty”.
Just as doctors and lawyers have an obligation to put their clients’ interests ahead of their own, so do financial advisers, he argued.
“We thought, with the passage of FOFA legislation and associated work to further raise professional standards, it seemed that financial advisers had commenced a similar evolution,” said Mr Collins.
The most commonly cited reason for the changes, ‘reducing red tape’, is disingenuous, Mr Collins said.
“The changes proposed by the Abbott government to the best interests duty are not minor tweaks to remove unnecessary red tape,” he said.
“I come from the Liberal side of politics. I’ve spoken about removing red tape in the past … You can’t confuse removing red tape with removing legal rights and protections.”
Instead, the changes will equate to “an effective repeal” of the best interests duty, he said – with the remaining six steps in the duty “failing to mention any requirement to consider the client’s best interest”.
The result of the amendments will be that the “legal minima” for financial advice in Australia will be “lower than it’s ever been in the past”, said Mr Collins.
“Never before have financial laws permitted a planner to avoid responsibility for poor or self-serving advice if the client has agreed to the scope of the advice provided,” he said.
The ISA will take a “very strong stance” on the issue in the weeks ahead, said Mr Collins – particularly when it comes to the manner in which the government intends to enact the amendments.
Any changes to the FOFA legislation – which has been four years in the making – should take place after proper parliamentary debate and not via regulation, he argued.
In addition, there is presently “a very live and current question regarding the extent of the government’s regulation-making powers within the FOFA legislation”.
“[This] leaves the industry highly exposed should it rely on regulation which proves to have exceeded the executive’s delegated powers,” he said.
“So, going down the path of regulating these amendments will create, rather than prevent, uncertainty.”
This is desperate noise coming from ISA in the wake of government sponsored shackling of advice professional disappearing.
Cant help but laugh at the gullible souls enlisted to champion the ISA cause on the premise that this is about advice.
You don’t have to be a Veteran to understand that this is red tape for regulation of Advisers for the protection of the ISA. Nothing misleading or confusing about that. The gross generalisations about the industry and its participants smacks of hubris.
Theres a lesson here for our industry Associations who accepted at face value the promises made by an opposition keen to get elected and then assumed FOFA would be amended easily
Legislation changes to effect FOFA changes won’t happen until 1 July. The good Senator is going to do it by regulation. Regulations can be disallowed !
Its not quite the same as having an opposition spokesman to lunch to say what he thinks we want to hear. Did anyone ask the detailed questions at the time ?
No chance Peter Collins, we now have a real Prime Minister not a union puppet, first the CFMEU then all unions will be put under the blow torch, I cant wait to see what the industry (Union) funds put under the microscope, and all the back hands and corruption comes to light…
Peter Collins is right about the misleading assertions about red tape being confused with regulation and protection, just as Ben is about as far wrong as one could be… For decades this industry has been led by the nose by product manufacturers who pay commissions for sales. They’re laughing at you behind your backs and say they are amazed at the greed of those advisers who are stuck in the old ways of doing business. They know they created the monster but still can’t believe it hasn’t crawled away…
The pity is it’s only a small minority (like the trolls who inhabit this comments site)who don’t get it. In my experience the majority have moved on; they charge fees for service and would prefer that trailing commissions were gone so as to clear the air. They also recommend industry funds where appropriate ( I find that maybe 10-20% should stay where they are for a variety of reasons and am happy to say so) as their fee model allows them to be unbiased. Some of you need to wake up.
WHAT A LOAD OF CRAP, THIS INDUSTRY IS OFF THE SCALE WITH COMPLIANCE AND REGULATORY REQUIREMENTS NOW, ENOUGH IS ENOUGH, LOCK UP ANY CROOKS AND LET THE TRUE INDUSTRY PUT YOUR CLENT FIRST PLANNERS GET BACK TO BUSINESS! WE HAVE JUST HAD A TERRIBLE GFC,REMOVAL OF COMMISSIONS,PLATFORM COSTS FALLING RAPIDLY, FRANKLY AFTER 37 YEARS IN THIS BUSINESS I HAVE NEVER SEEN A MORE CONSUMER FOCUSED INDUSTRY THAN RIGHT NOW.
Once again we have product providers trying to influence and shape the financial advice profession for their own benefit. Can you imagine a pharmaceutical company putting pressure on the government so the laws governing our medical profession are changed to suit themselves? Worse still they employ their own doctors who repeatedly prescribe their own product, and they resist full disclosure of key information related to their underlying products and processes? It would be unthinkable. Yet somehow this behaviour is tolerated from the Industry Fund product sector!
Aww diddums….I can’t understand why they’re so angry about this? Parts of FoFA had nothing to do with professional standards…..I can only assume they are bitter about those parts.