Future of Financial Advice

The Future of Financial Advice (FoFA) is a proposed regulatory framework in relation to financial advice that was put forward by the Rudd Government in early 2010.

FoFA is being brought in to improve the quality of financial advice and consumer outcomes as a result of the failures of financial advice firms in the late 2000s. Enabling easier provision of simple advice is expected to make financial advice more affordable as well as increase public access and usability.

Its stated aims are to improve the standard of financial advice and remove distorting remuneration. It will also see the removal of the 'accountants' exemption' in relation to SMSF advice.

Currently accountants are able to provide advice on SMSFs under the exemption provided by Regulation 7.1.29A of the Corporations Regulations 2001. With the FoFA reforms, this exemption will be removed, meaning that accountants will be unable to provide SMSF advice without either holding an Australian Financial Services License (AFSL) in their own right or being an authorised representative of a licensee.

The IPA and other professional accounting are in negotiations with Government to try and ensure that accountants and their clients are not disadvantaged by the proposed changes. We have recommended to the Government that an appropriate system be put in place that will allow accountants to provide a greater range of services and advice in relation to financial matters.

The legislation implementing the majority of the reforms will commence from 1 July 2012. The ban on upfront and trailing commissions will apply from 1 July 2013. As yet there is no proposed date for the removal of the accountants' exemption.

The Government released the first tranche of FoFA legislation on 29 August 2011.

The IPA will provide updates on FoFA as they come to hand.

FAQ - The IPA has prepared a Frequently Asked Questions document to assist members with common questions they may have about FoFA.

Financial Services Platform - As a result of the FoFA reforms the IPA has developed a platform to provide members with access to financial planning services.

futureofadvice.treasury.gov.au - Treasury's Future of Financial Advice Site.

Register of Activities - The IPA continues to lobby Government on behalf of all accountants in relation to FoFA.  See what we've been doing via our Activities Register.

To discuss your particular queries or circumstances, please call Reece Agland, ph (03) 8665 3115 or email him at: reece.agland@publicaccountants.org.au