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Best interests duty removal a ‘fallacy’

Claims the government’s announced FOFA amendments will reverse the fiduciary duty for financial advisers are “absolute rubbish”, according to the AFA.

Reflecting on the debate surrounding the announced changes, Association of Financial Advisers chief executive Brad Fox said the mainstream media and other stakeholders have been peddling misrepresentations of the truth.

“The mainstream media’s reporting that the amendments will strip out the best interests duty is the biggest fallacy and misrepresentation of the truth around,” Mr Fox said.

“[The amended package] does not get rid of the best interests duty – it is simply creating a best interests duty that will work in practice and work for clients as well as make sure advisers know the boundaries better”.

The claim is an example of the “absolute rubbish” being written by “well-known reporters and media outlets”, he said, calling on advisers to “ignore the static” and issue personal communications to clients refuting the claims.

While Mr Fox did not single out specific media, an article by Australian Financial Review political editor Laura Tingle suggested the proposed amendments seek to “overturn virtually all of the former Labor government’s reforms to the financial planning industry”.

Asked whether stakeholders other than the media should take responsibility for perpetuating the myths – for example Industry Super Australia’s statement responding to the proposed changes said the move would “re-open the debate about whether a financial planner is an impartial adviser or sales rep” – Mr Fox said the whole debate is beholden to vested interests.

“There are a lot of agendas at play here. All of these issues relate to one of the world’s largest superannuation pools – and the competition for that money is pretty fierce,” he said.

Mr Fox also rejected shadow treasurer Chris Bowen’s Twitter claim that the proposed amendments will make “another Storm, Westpoint or Trio collapse more likely”.

“It is politically convenient to say that the amendments will create another Trio, but it’s simply untrue,” Mr Fox said, pointing out that “product failure” is the true reason for the fund manager’s collapse, and that the Murray inquiry, not FOFA, is the appropriate vehicle for dealing with that issue.