The government will introduce a number of “new consumer protection measures” for financial advisers, after reaching a deal with Clive Palmer to block a challenge to its FOFA amendments.
A motion initiated by Labor Senator Dam Dastyari to disallow the government’s FOFA regulations fell short yesterday, defeated by 34 votes to 31 after the Palmer United Party pulled support for the motion despite having previously voiced strong opposition to the amendments.
The motion was also opposed by cross-bench senators Bob Day and David Leyonhjelm, as well as the Motoring Enthusiast Party’s Ricky Muir, who last week voted in support of Labor’s initial motion that paved the way for yesterday’s move.
In a statement issued last night, Mr Palmer took credit for a range of “new measures” that the government has agreed to include in regulations to be tabled within the next 90 days.
“The Palmer United Party will only support FOFA regulations that are unambiguous, transparent and clear,” Mr Palmer said.
“It appears that a common sense approach has prevailed following a successful conversation with [Finance Minister Mathias Cormann] and the diligent work of the Palmer United senate team which always has the best interests of Australians at heart,” he added.
A letter tabled by Senator Cormann and seen by ifa confirms that the government has acquiesced to Mr Palmer’s desired changes, including an agreement to “establish an enhanced register of financial advisers (including employee advisers), which includes a record of each adviser’s credentials and status in the industry”.
In addition, Senator Cormann's letter reveals that:
“The government will make further regulations within 90 days to ensure the following requirements in the Corporations Act 2001 are explicitly listed in the Statement of Advice provided by financial advisers to their client and signed off by both:
- That the adviser is required to act in the best interest of their client and prioritise their client's interests ahead of their own;
- That any fees be disclosed and that the adviser will provide a fee disclosure statement annually, if the client enters into, or has entered into, an ongoing fee arrangement after 1 July 2013;
- That a client has the right to return financial products under a 14-day cooling-off period in accordance with the requirements currently provided under Division 5 of Part 7.9 of the Corporations Act 2001; and
- That the client has the right to change his or her instructions to their adviser, if for example they experience a change in their circumstances.”
Speaking to ifa, FPA chief executive Mark Rantall said a vast majority of Mr Palmer's "new" requirements are already implicit within the Corporations Act and current adviser requirements and are in line with his organisation's 10-point plan, but said the FPA would "digest the full detail" of the new regulations.
AFA chief executive Brad Fox concurred the move will be "positive" for advisers and said he does not anticipate additional red tape burdens, singling out the inclusion of the best interest duty in a statement of advice as a measure that may help restore the profession's levels of public trust.
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