The federal government’s financial advice reforms are anticipated to pass through the Senate next week unopposed.
Predictions from within the financial services industry tip the Future of Financial Advice (FOFA) reforms will gain approval with little or no amendments.
One industry insider, who wished to remain anonymous, said he fully anticipated the legislation to be passed with no substantial changes.
Association of Financial Advisers (AFA) president Brad Fox said the association was aware the FOFA legislation was likely to be discussed in the Senate and the opposition was expected to raise its own objections.
“We are aware that the FOFA legislation is likely to be discussed in the Senate this week, and we also note that the commencement date amendment is being introduced,” Fox said.
“We remain opposed to opt-in and fee disclosure statements for existing clients. We are aware that Senator [Mathias] Cormann will be introducing his own amendments, which in many cases align with the views of the AFA.”
He said while the association expected the FOFA discussion would be robust, it looked forward to some of the industry’s key concerns being “brought to the surface”.
“We also appreciate that advisers need to continue working with clients and providing advice that for many will be critically important,” he said.
“Our focus is also on the draft regulations that have started to be issued by Treasury for consultation.
“However, we remain concerned that many of the key commitments that the government has made, and the industry have understood to be the case, are yet to be released.”
The key regulations the AFA was seeking included those that covered grandfathering arrangements for payments from platform operators and the requirement for fee disclosure statements for existing clients, where the fee represented a product fee, he said.
FPA chief executive Mark Rantall said it was the association’s understanding that “the numbers” would be in favour of the passage of the bills.
“We don’t anticipate any late changes. It will be passed as presented by the House of Representatives,” Rantall said.
“The assumption is that it will be passed.”
While he said the implementation of the legislation with its members was the association’s immediate focus, the FPA remained unsatisfied with elements of the reforms.
“Clearly there was not everything in the legislation that we necessarily agree with. We don’t agree with opt-in being part of the legislation,” he said.
“It would have been nice to have that removed.”
Another unresolved element for the association was that of scaled advice and the lack of regulation guidance from ASIC, he said.
“We’re still waiting on regulatory guides on scaled advice [and how that] can operate under best advice,” he said.
Conversely, he said the association was supportive of the removal of conflicted commission remuneration and the banning of commissions.
Meanwhile, he said the FPA continued to work with the corporate regulator on its approved professional codes.
“We’re waiting on regulation guidance from ASIC as to what the requirements will be in the approved code,” he said.
