In a submission to the Senate Economics Legislation Committee inquiry into the FOFA amendments, Minter Ellison Partner Richard Batten noted the general advice exemption is currently limited to employees of licensed product issuers.
But in practice, it is unusual for product issuers or licensees to employ staff directly, said Mr Batten.
“In most corporate groups, a related service company will be the employer of staff for all or most companies in the group,” he said.
“Even in cases where a product issuer such as a bank is the group employer, the product issuer is unlikely to be the issuer of the particular products in question,” said Mr Batten.
In addition, product issuers do not only promote products through employees, he said.
“In many cases, they engage staff as contractors or engage third-party providers, such as call centres, to provide services in the name of the product issuer,” said Mr Batten.
“However, there is no difference for the consumer whether they are dealing with an employee or a contractor and they would not normally know.
“As far as [the consumer] is concerned, they are dealing with the product issuer and would expect the product issuer’s products to be promoted to them,” Mr Batten said.
There are a number of protections for consumers in relation to the conduct of product issuers and their representatives, including the prohibition of misleading and deceptive conduct in the Corporations Act, he said.
Section 963B9(b) should be amended to “also apply to employees of related bodies corporate of the product issuers”, and “be extended to agents of the product issuer and others acting under the name of the product issuer”, said the submission.
Addressing the FOFA regulations more generally, the submission noted the significant delay in their implementation along with the current ‘pause’.
“This is causing considerable difficulty for industry, particularly in relation to obligations due to commence on or around 1 July 2014 – employee remuneration and the cessation of grandfathering for certain new investments,” said Mr Batten.
“We therefore submit that there should be a further extension to comply with the FOFA regime in relation to conflicted remuneration for at least an additional six months.”
