The financial planning industry is fighting back against the unwanted accountability of the existing FoFA laws. Mark Rantall, chief executive officer of the Financial Planning Association of Australia, has warned retaining the existing FoFA laws will cost consumers millions of dollars.

His remarks come in response to the Senate’s decision to reinstate the FoFA consumer protection laws. Consumer groups say the laws are vital to hold financial planners accountable for the advice they give and the remuneration they receive. The industry is littered with egregious, self-serving shysters as it is; removing the only protections we have will open the floodgates to outright criminality.

Mark Rantall told reporters: “If you are getting advice you will get an extra lot of paperwork and you’ll be required to “opt-in” every two years for the advice and receive an annual fee disclosure statement.

“With that goes cost and administration so what it could mean for consumers is that it will mean an increased cost of advice.

“The estimate is there will be a $270 million loss.”

But consumer group Choice disagrees. Chief executive officer, Alan Kirkland, believes the reversion back to FoFA laws will offer consumers better protection; saving them a lot more than they would lose through the sharp-practices and slick sales techniques of planners.

“The original Future of Financial Advice laws,” he said, “put the industry on a genuinely professional footing, so it can provide the independent, trustworthy advice Australians need and expect.

Image: www.goodfinancialcents.com

Image: www.goodfinancialcents.com

“These protections are overwhelmingly supported by the majority of Australians and we urge the Government to abandon further attempts to water-down this legislation, risking further uncertainty and adding to compliance costs for industry.”

The big hitter behind the FoFA laws was the stipulation that planners must act in their client’s best interest. This was the one law protecting consumers from planners’ incentives to push certain products over others for their, rather than their client’s, gain.

The FoFA laws made it more difficult for planners to receive payments from institutions and wealth management companies, ensured the planners were clear and upfront about their fees, and outlawed conflicts of interest.

Leave a Reply

Your email address will not be published.