The Senate committee overseeing the FOFA Bill has tabled its much-anticipated report on the government's proposed amendments.
Following yet another consultation process with stakeholders including consumer advocates and the financial services industry lobby groups, the Senate committee has recommended that the Bill amending FOFA be passed.
Committee chair and Coalition Senator David Bushby concluded that while the committee took the various views opposing the Bill seriously, that ultimately it came to the decision that the government’s proposed amendments “strike the right balance” between consumer protection and the need to reduce red tape for financial advisers, thereby reducing barriers to Australians seeking financial advice.
While the committee recommended the overall passage of the Bill it also made two additional recommendations.
First, it recommended that a paragraph be added to the legislation which “clearly and unambiguously spells out the best interest obligations…and the level of consumer protections they provide” as well as how these “separate obligations work together”.
This recommendation notwithstanding, the committee concluded that it was “convinced…that the removal of the catch-all provision would not dilute the best interest duty” and that the fiduciary duty as proposed in the government’s amendments would be good for both “client and adviser”.
Secondly, in response to the heated debate over the proposed conflicted remuneration exemption for general advice, the committee recommended that the government “redraft the conflicted remuneration provisions”.
In particular, the report suggests that the terms “information, general advice and personal advice” be re-examined in order to make “distinctions between them much sharper” and help avoid confusion on this contentious issue.
However, while the majority of the committee recommended the passage of the Bill, both Labor and the Greens issued dissenting reports recommending that the parliament vote against the Bill.
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