The opt-in advice proposal contained in the government’s Future of Financial Advice (FOFA) reforms is redundant public policy, according to a number of financial services stakeholders.
“From where I sit, opt-in is really bad, heavy-handed public policy. It’s not about engagement, although we absolutely support that clients should be engaged on a minimum on an annual basis,” FPA chief executive Mark Rantall said.
“But the trouble is, and where the problem is with opt-in, is that we’re looking to legislate it and the consequences of things going wrong are just way outside any benefits that opt-in will provide.”
Rantall added there was no profession in the world that had legislated opt-in advice.
“Is it good practice to engage with your clients every year? Absolutely it is, of course it is. But it’s not about that, it’s about heavy handedness and legislation and the consequences of that,” he said.
“It’s redundant policy and it’s overkill to the extreme given that we’re already banning commissions, which we support.”
Shadow assistant treasurer Mathias Cormann said the opt-in advice proposal was pointless.
“We think it’s unnecessary, it adds red tape and unnecessary costs,” he said.
“People who have life term partnerships with their financial advisers, this is a contractual relationship between an adviser and his client and there is no need for the government to get themselves in the middle of it.”
Meanwhile, Count Financial chief executive Andrew Gale said the most significant risk in regard to opt-in advice was around the law of unintended consequences.
“I think there’s a real risk that especially an annual opt-in arrangement is actually not in the client’s best interest,” he said.
“First of all it will probably mean that the cost of advice will go up, because the reality is that an adviser will put a lot of effort in right up front in terms of the client and strategic advice.”
