Law firm Henry Davis York (HDY) has flagged concerns over the second tranche of the Future of Financial Advice (FOFA) reforms.
“The proposed conflicted remuneration definitions [in the FOFA draft laws] are not limited to personal advice situations,” the company said in its submission to government on the reform package.
“We submit that they should be.”
HDY said there could be unintended consequences for financial product issuers, platform providers and investment managers if conflicted remuneration prohibitions extend beyond personal advice.
Superannuation trustees, responsible entities, platform providers and investment managers often receive investment management or administration fees for the management and administration of their retail clients’ investments in a fund, the submission said.
“These same responsible entities, superannuation trustees, platform providers and investment managers produce investor-directed educational and investment-related information containing financial product advice to these clients at no cost,” it said.
“The likely consequence of this is responsible entities, superannuation trustees, platform providers and investment managers ceasing to provide investor-directed educational and investment-related information containing general financial product advice to their clients.”
HDY said this consequence would appear contrary to industry, regulatory and government initiatives to promote financial literacy and understanding among retail investors.
