In July 2013 the Australian Government’s amendments to the Corporations Act 2001 came into force as part of the Future of Financial Advice (FoFA) reforms. The reforms were designed to bring clarity to the provision of financial advice and fees charged, and to require that financial advisors act in their client's best interests.
These important changes include:
- banning financial advisers from accepting commissions if it is likely to influence the advice they give to a client
- clients need to opt-in for ongoing advice fees every two years
- all commissions are banned on insurance products inside superannuation (prospective ban); the ban does not (at this stage) extend to insurance products outside superannuation
- volume-based payments are banned
- banning of all upfront and trail commissions (and like payments)
- banning all payments of commission of $300 or more (per benefit) to a third party in exchange for services that are not directed by the client but will benefit them (with an exclusion for professional development and IT administration services where set criteria are met); these are called soft-dollar payments
- expanding a new form of limited advice called scaled advice, which can be provided by a range of advice providers, including superannuation trustees, financial planners and potentially accountants, creating a level playing field for people who provide advice, and
- introducing a statutory best interest duty for financial advice with a reasonable steps qualification.
We can help you
Maurice Blackburn has the largest superannuation, insurance and financial advice disputes department in Australia. If you believe you are not being treated fairly by your financial adviser or another professional in this industry, contact us immediately.