The future of financial advice (FOFA) is proposed regulatory framework. It is being brought in to improve the quality of financial advice and consumer outcomes as a result of the failures of financial firms in the late 2000s. It enables easier provision of simple advice which can be expected to make financial advice more affordable as well as increase public access and usability.
FOFA will see the removal of the accountant's exemption. Presently accountants are able to provide advice on SMSFs under the exemption provided by regulation 7.1.29A of the Corporations Regulations 2001. Through this FOFA, cheep insurance for young professionals the accountants can hold an Australian Financial Services License (AFSL) in their own right or being an authorised representative of a licensee.
Many in the financial industry will need to restructure their administrative systems in order to comply with the requirements and will incur transition costs as a result. But however the FOFA reforms will also create new opportunities. This will benefit consumer in enjoying results of the reforms which bring confidence in the industry, in turn, contributing to an increased demand for advice.
The benefits of FOFA are given below:
- Superannuation products and securities.
- Easy managed investment schemes as defined in the Corporations Regulations 2001,
- General and life insurance
- Basic deposit or banking products.
- Life risk insurance products.
- A benefit for a genuine education and training purpose that is relevant to the provision of financial product advice to retail clients.
- Information technology support or software that relates to the provision of financial product advice.
- Financial adviser's interests will become aligned with client interests, leading to more client-focused advice and greater adviser engagement with clients.
- In this process product recommendations will not be influenced by commissions given to advisers by product issuers.
- Here clients will be less likely to suffer detriment as a result of excessive fee arrangements or sub-optimal investment strategies.
- A more competitive advice market and greater availability of advice.
- The financial planners will be discouraged from recommending imprudent investment strategies.
- In FOFA, a reduction in product fees which will result in significant savings for consumers and reduces the rogue advisers in the industry.
Consumers are the primary focus of FOFA and the Government believes that consumers will greatly benefit from structural change in the financial industry in a way that will outweigh the implementation costs to industry. The above all the quality of financial advice will improve, leaving consumers better equip to make decisions about their finances.
No comments:
Post a Comment