The Financial Services Council (FSC) has developed its own financial advice renewal framework as an alternative to the annual opt-in method that has been proposed as part of the Future of Financial Advice (FoFA)reforms.
"FoFA's proposed annual opt-in will actually reduce consumer protection. Locking in a consumer over one year is inferior to allowing them to walk away at any time over a three-year period," FSC chief executive John Brogden said.
"We advocate a three year renewal, where consumers can opt-out and cease their payments at any time," he added.
The industry association chief highlighted three advantages its proposed framework had over the FoFA recommendation.
"It puts complete control in the hands of consumers, it won't drive short-termism, and it reduces the administrative burden on small businesses, whilst retaining the highest consumer protection," Brogden said.
Also included in the renewal framework is a call to have financial advisers produce an annual statement for their clients providing details of the fees paid and services delivers over the past 12 months along with the fees and services for the coming year.
Brogden said the FSC proposed renewal framework has already been presented to Treasurer Wayne Swan and the Minister for Financial Services and Superannuation Bill Shorten.
"The phase they're in is: no feedback, just listening. So the timing we're seeing publicly.is that the minister will be making his decisions, and I assume the cabinet process is somewhere entwined in this, in March/April," he said.
"I assume they'll put out draft legislation in June/July with the objective of having legislation in October/November. I don't know whether they'll be in one package of legislation," Brogden said.
