The draft amendments to the controversial FOFA regulations have been released, as the Federal Government looks to reduce compliance costs for financial service providers.
First announced at the end of the year, the reforms are aimed at reducing red tape, according to Assistant Treasurer Arthur Sinodinos.
“The Government is supportive of the principles of FOFA, but the previous Government’s reforms are unwieldy, burdensome and unnecessarily complex,” he says.
“The proposed reforms will reduce the burden on industry and pressures on the cost of advice to consumers.”
Radford Lawyers Principal and NIBA Legal Counsel Mark Radford says the fact insurance brokers were left relatively unburdened by the original FOFA legislation means the effect of the reforms is relatively minor, although there are some significant changes.
These include changes to the statutory best interests obligation, as well as the conflicted remuneration ban.
“The ban will now only apply in relation to personal advice, not general advice, which is a significant change,” Radford says.
“The Government considers that the application of the ban on conflicted remuneration risks limiting the availability of general advice and unneccesarily burdens industry by capturing staff not directly involved in providing advice to clients.”
For more information about the amendments, see Radford’s detailed analysis here.