The Financial Planning Association (FPA) has called on government to reopen the debate on its opt-in proposal after independent member of parliament (MP) Rob Oakeshott said he would oppose the clause as it stands.
Oakeshott, the member for the New South Wales seat of Lyne, said the clause should be extended to at least five years.
“The opt-in arrangement on service agreements, moved from annual to every two years, is a problem for many smaller financial businesses in regional Australia,” Oakeshott said in an email to InvestorDaily.
“I will be interested to see the coalition amendments on this issue, but I am also considering amending this to at least five-year service agreements and would be interested if the coalition wishes to go further.”
Financial Services Minister Bill Shorten’s Future of Financial Advice (FOFA) reforms include an opt-in clause that would require clients to formally extend financial adviser relationships by signing fresh contracts every two years.
The FPA hopes comments by Independent MP Rob Oakeshott will ensure the government will reconsider this proposal.
FPA chief executive Mark Rantall said the organisation has strongly lobbied against the opt-in proposal.
“The FPA has led the way in calling for an end to commissions-based payments on investments and believes the abolition of these and the implementation of a fiduciary duty, or best-interests, test make the implementation of any opt-in requirement excessive and obsolete,” Rantall said.
The FPA said it would continue to discuss the reforms with the government, opposition and independents, and it has encouraged its 8000 members to continue raising the issue with local MPs.
Opposition financial services spokesman Mathias Cormann said the coalition would block FOFA in its current form and has said he would lobby independent MPs for support.
“We are pleased to see that Mr Oakeshott has recognised that these changes would hurt financial advisers and consumers,” Cormann said in a statement.
“We look forward to working with Mr Oakeshott and the other members of parliament to ensure that Labor’s latest version of FOFA proposals are amended to avoid increased red tape and costs for both financial advisers and consumers,” he said.
