Australia's wealth management industry will benefit from more flexible commencement arrangements for the Future of Financial Advice (FOFA) reforms.
The reforms will commence from 1 July 2012, as originally announced, but the application of the provisions will be voluntary until 1 July 2013. Mandatory application will start from 1 July 2013.
This means that any business who wants to start complying with the reforms from 1 July 2012 will have the opportunity to elect to do so. From 1 July 2013, the entire industry will be required to comply.
"The Government has listened to concerns from the business and financial planning community that they need more time to prepare for these changes. This timetable also balances consumer needs, as it gives early industry movers the opportunity to provide commission-free products from 1 July 2012," Minister for Financial Services and Superannuation Bill Shorten said.
"The revised implementation arrangements will lower industry implementation costs as they will be able to synchronise FOFA and Stronger Super reforms."
"The FOFA reforms are about making sure more Australians can access affordable and better quality financial advice, free from the conflicts of interest created by commissions and other product payments. These reforms will drive greater competition and innovation and are a long term growth strategy for this important industry," said Minister Shorten.
ASIC research shows that only 20 to 40 per cent of Australia's adult population use or have used a financial adviser.[1]
The Government will continue to work with all stakeholders to ensure these reforms are implemented in the most cost-effective way possible in the best interests of consumers.
14 March 2012
[1] ASIC REPORT 224, Access to financial advice in Australia, December 2010, p.14.