Australia’s corporate regulator has moved to reassure the financial planning industry after the Federal Senate struck down Coalition regulations that wound back some of the more controversial elements of the Future of Financial Advice reforms.
The dramatic cross bench revolt means Labor’s FOFA regime is now back in full force but ASIC has stated it will take a practical and measured approach to administering the law.
“We will take into account that – as a result of the change to the law that applies to the provision of financial advice – many Australian financial services (AFS) licensees will now need to make systems changes,” an ASIC statement said.
“ASIC recognises this issue may arise in particular areas, including fee disclosure statements and remuneration arrangements.
We will work with Australian financial services licensees, taking a facilitative approach until 1 July 2015.”
The biggest consequences of the rollback are the reinstatement of requirements that financial planners act in their clients’ best interest and have their clients sign a new contract every two years, disclosing what fees they charge.
Financial Services Council CEO John Brogden says the change will cause havoc.
“The market impacts of an immediate disallowance would create a legal quagmire, millions of dollars in business disruption costs and reduce affordability and accessibility of financial advice to Australians,” he says.