The Assistant Treasurer has announced that the Government has agreed with the Opposition to progress “minor and technical refinements” with a view to finalising the FOFA provisions in Part 7.7A of the Corporations Act 2001.
The agreed refinements will be contained in a new regulation, to be made before 1 July 2015, to:
- clarify that advice provided to an employer about default superannuation funds is considered to be providing a financial service to a retail client;
- make FOFA consistent with other parts of the Corporations Act by including a wholesale and retail client distinction;
- update FOFA to treat non-cash payments, such as travel money cards, consistently with other simple financial products;
- ensure that the modified best interests duty applies in respect of advice on basic banking products and/or general insurance even where provided at the same time as advice on the provision of consumer credit insurance (which attracts the full best interests duty);
- make the conflicted remuneration exemption that applies to basic banking products and general insurance applicable to benefits relating to consumer credit insurance where an employee or agent of an authorised deposit-taking institution provides advice on any or a combination of these three products; and
- ensure that benefits provided by a retail client to their financial adviser are exempt from conflicted remuneration provisions.
UPDATE: Corporations Amendment (Financial Advice) Regulation 2015 registered 29 June 2015.
The Government is also consulting on further refinements to be legislated in the second half of the year to:
- ensure the existing ‘mixed benefits’ and ‘intra-fund advice’ provisions operate as intended;
- ensure that future governments can specify in regulations that certain benefits are caught by the ban on conflicted remuneration; and
- extend and align the periods of time that an adviser has to send an opt-in renewal notice and a fee disclosure statement to their client to 60 days, to facilitate adviser compliance.
The Assistant Treasurer notes that once these refinements are finalised, “FOFA should be considered settled and given time to work”.
