While the bank has fully embraced aspects of the Future of Financial Advice regime, such as the best interests duty and ban on conflicted remuneration, CBA executive general manager, wealth advice, Marianne Perkovic believes a number of amendments are necessary and is calling on legislators to facilitate the changes.
“With the change in government, people in pockets of the industry are suggesting there is the opportunity now to wind back parts of FOFA,” Ms Perkovic told a roundtable discussion at the recent Finsia conference.
“We are strongly advocating some of that where we believe it has only increased the cost of providing advice, without any customer benefit – [the fee disclosure statement (FDS) requirement] is an example.
“With FDS, while we are absolutely intending to comply with those requirements, when you look at the amount of paperwork that the client already signs – not just from the adviser but from the product manufacturer as well – I find it hard to believe that one piece of paper that outlines all these things is then going to give the client any additional security or comfort.”
Ms Perkovic said that transparency is more effectively attained through “proper upfront communication” between adviser and client about the fees and services provided, and welcomed the Coalition’s pledge to wind back the retrospectivity of FDS.
In addition, Ms Perkovic raised concerns over the opt-in clause, stating that the fiduciary duty introduced by FOFA makes the clause redundant and that the bank has already ceased putting systems in place to facilitate the requirement, given the Coalition’s promise to repeal the relevant provisions.
The ban on commissions on insurance in superannuation should also be removed, Ms Perkovic said, in order to assist with the “underinsurance problem Australia faces”.
Former Coalition financial services spokesperson Senator Mathias Cormann – now the Minister for Finance – had previously indicated to the industry that an Abbott government would be “ready to go” on all of its legislative promises relating to the FOFA regulations, Ms Perkovic said, calling on the incoming ministers to make good on this promise.
In its pre-election productivity policy document, the Coalition pledged a moratorium on further regulation of the financial services industry as well as promising to put the 16 recommendations it made to the parliamentary joint committee on financial services FOFA hearings to a vote in parliament.
Addressing a press conference last week, Prime Minister Tony Abbott said he will be announcing the recall date for parliament “shortly”, adding that he will not “bring parliament back prematurely for a photo opportunity”.
