The general advice exemption proposed under the FOFA amendments is dividing opinion in the financial advice industry, with the AFA and FPA on opposing sides of the debate.
Responding to claims made in numerous mainstream media reports and by shadow financial services minister Bernie Ripoll that the proposal to exempt “general advice” providers from FOFA’s conflicted rem ban constitutes a “loophole” watering down consumer protection, AFA chief executive Brad Fox said the notion was “totally misconceived”.
“The interpretation of the FOFA Amendments relating to general advice have been reported as meaning that financial advisers will provide general advice in order to be able to receive conflicted remuneration,” Mr Fox said. “These claims are a misinterpretation of the purpose of the draft FOFA amendments.”
The provisions pertaining to “general advice” are only relevant to salaried bank and call-centre “advisers”, not holistic retail financial planners, unlike what is being misreported in the mainstream press, Mr Fox said.
The exemption has long been part of the Coalition’s pre-election financial services policy platform, he added.
However, the FPA has a very different take on the matter, coming out strongly against the proposed general advice exemption.
Speaking at the recent Financial Advice in Super symposium in Melbourne, FPA chief executive Mark Rantall reiterated Bernie Ripoll’s concerns about the “creation of a loophole under general advice and execution”.
“Don't get me wrong, I'm OK with general advice and if you want to build a bonus structure to help create more advice for Australians and provide them with general advice…I'm ok with that,” he said.
“But if it means bringing back commissions and it provides a loophole that will be applicable to everybody and you can drive a truck through for execution and general advice that's the one we should be debating.”
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