The Future of Financial Advice (FOFA) reforms were introduced by the government to improve the quality of financial advice in Australia and enhancing investor protection.
We believe this is a really positive move for the industry and we fully support the push towards a more professional industry. This legislation reinforces the need for advisers to always provide advice with their clients best interests at heart and provide transparency around the services and fees associated with the advice. Whilst this legislation doesn’t mean a great deal of change for us (as we’ve had these ideals in place for a number of years) it does provide for increased compliance from ASIC.
The legislation amended the Corporations Act and introduced:
- An annual fee disclosure statement requirement
- This document is a summary of the services we’ve provided and the ongoing service fees we’ve agreed upon.
- An opt-in obligation that requires advice providers to renew their clients’ agreement to ongoing fees every two years
- This document is required to be sent to new clients (post 1 July 2013) on new ongoing fee arrangements every two years, asking them to actively re-commit to an ongoing fee arrangement.
- A duty for financial advisers to act in the best interests of their clients and place the best interests of their clients ahead of their own
- FoFA requires that advisers act in the best interests of their clients, and put their interests above anything else. The best interests obligations apply each time advisers provide personal advice to clients.
- A ban on conflicted remuneration structures including commissions and soft dollar benefits
- A ban on remuneration or other benefits (monetary or non-monetary) where the nature of that benefit or the circumstances in which it is given, could reasonably be expected to influence the choice of product recommended or the advice given by the adviser.
Please contact us if you have any further queries on the FoFa reforms 02 9929 3343 or firstname.lastname@example.org