The Association of Financial Advisers (AFA) has specified five amendments it wants in the government’s financial services reform package in a letter to all members of Parliament and urged them to back the AFA’s position or risk sharply increasing the cost of advice to consumers.
In sending the letter, the AFA is aiming to shore up support for its position that the government’s Future of Financial Advice (FOFA) reforms fail to help consumers and punish advisers, particularly those in smaller, independent practices.
“The key test for FOFA, which the AFA has continued to support, has always been improved transparency and increased access to advice,” the AFA said in the four-page letter, signed by national president Brad Fox and chief executive Richard Klipin.
“Our view is that FOFA, as it is currently drafted, delivers neither.”
The AFA wants retrospective fee disclosure requirements and the opt-in obligation removed. It also wants the best interest duty definition clarified and assurance that the ban on conflicted remuneration is not retrospective.
It also wants to delay the start date of the reforms to 1 July 2013 to give the industry adequate time to prepare for FOFA in its final form.
The amendments would involve the full deletion of 12 sections of the Corporations Amendment (Future of Financial Advice) Bill 2011 and changes to five others.
The AFA and FPA have been busy in Canberra meeting with independent MPs, whose votes will likely determine the final shape of FOFA.
However, FPA general manager of policy and government relations Dante De Gori said the numbers appeared to be in the industry’s favour.
De Gori said the industry so far had the support of at least two independent MPs to back its position, enough to defeat FOFA in its current form.
“We need two to vote against, as well as the coalition. They’re my numbers,” he told InvestorDaily.
Independent MP Rob Oakeshott has told ABC television he was inclined to oppose the opt-in clause of FOFA.
“That is a position that he has firmly come to now,” De Gori said, adding the FPA was now talking to Oakeshott and his advisers about best interest and fee disclosure.
He said independent MPs Bob Katter and Tony Crook had also signalled support for the financial planning industry’s position.
“We expect [Katter] and Tony Crook to be aligned with the coalition,” he said.
He said the FPA would meet next week with independent MP Andrew Wilkie, and it was still trying to meet with independent MP Tony Windsor.
