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Connexus : Issue 39
22 Connexus Regulation M Ps have given the green light to the Future of Financial Advice (FoFA) reform package after some last- minute horse-trading over the controversial ‘opt-in’ provision affecting financial planners. The impact of the sweeping FoFA reforms on retail banking is softened by limited carve-outs from the new ‘best interests duty’ and the ban on ‘conflicted remuneration’. All stakeholders have an extra 12 months to prepare for the new regime, which does not become compulsor y until 1 July 2013. FoFA is the govern ment’s response to a string of financial services provider collapses, including Storm Financial, Trio Capital and Westpoint, and although the new laws are aimed at financial planners they will have a much broader impact. The legislation was passed by the House of Represent atives on the final sitting day of the Autumn session and is certain to be approved by the Senate after Greens MP Adam Bandt backed the government in the House. Financial ser vices minister Bill Shorten says the reforms are designed to tackle conflicts of interest that have threatened the quality of financial advice and to increase access to advice by making it easier to provide limited or scaled advice. “Put simply, FoFA means more money will be better managed,” says Shor ten. “ASIC research shows that only 20 to 40 per cent of Australia’s adult population use or have used a financial adviser. This is expected to increase now due to increased consumer con fidence and the flexibility that the new laws will enable. “By building trust and confidence in financial advice, FoFA is a growth strategy for the industry,” he says. Green light for advice reforms New financial advice laws will have far- reaching effects and ASIC is planning to provide guidance for ADIs. By lUkE lAWlER The industry will have until 2015 to develop an ASIC- approved code of practice.