FOFA needs 'fine tuning': Tynan

Further scrutiny of FOFA would be beneficial as the legislation is far too important to be rushed, according to Connect Financial Service Brokers.

Commenting on the federal government’s decision to pause the Bill, Connect Financial Service Brokers (Connect) chief executive Paul Tynan said the FOFA reforms still require some changes and fine tuning to raise both consumer awareness and ensure that their interests are safeguarded.

“It’s an unfortunate reality that the overabundance of special interest groups lobbying so intensely in the support of their specific sector, business or association is not helping the situation and regrettably many are putting their own interests far ahead of the industry and consumer,” MrTynan said.

Mr Tynan believes the general advice exemption from FOFA’s ban on conflicted remuneration will result in the reintroduction of commissions back into product

“If this does become a reality, I recommend the introduction of a full-disclosure regime,” he said.

His solution is to ‘brand’ general advice as aligned advice – where the advice is given by a person who is aligned to a product. For example, bank employees, industry fund and superfund employees.

The term ‘personal advice’ would relate to non-aligned advice where the adviser charges a fee for service and owns the client rights.

Mr Tynan contends that the changes to assist institutions design remuneration structures are inherently wrong.

“The need to move forward has never been so important or paramount,” he said.

“It is the financial advisers that continue to be the main casualties – especially those that have been unable to buy and sell businesses because of the grandfathering issue.”

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