The Senate disallowance motion for the FOFA regulations failed
yesterday, meaning the regulations will continue until the
Corporations Amendment (Streamlining of Future of Financial Advice)
Bill 2014 is passed. See our blog '
What is the future of the Future of Financial Advice?' for
further details of the amendments.
In exchange for Senate support for the regulations, the
Government has agreed to make further amendments to the regulations
and the Bill requiring certain additional disclosures in Statements
of Advice. The Acting Assistant Treasurer has announced that a
number of retail client protections are to be explicitly
acknowledged in Statements of Advice by both financial advisers and
their clients. The Government's press release lists these
"That the adviser is required to act in the best
interest of their client and prioritise their client's
interests ahead of their own, consistent with the requirements in
subsection 961B and 961J of the Corporations Act 2001;
That any fees be disclosed and that the adviser will
provide a fee disclosure statement annually, if the client enters
into, or has entered into, an ongoing fee arrangement after 1 July
2013 (This is already required under our amended financial advice
That a client has the right to return financial products
under a 14-day cooling-off period in accordance with the
requirements currently provided under Division 5 of Part 7.9 of the
Corporations Act 2001; and
That the client has the right to change his or her
instructions to their adviser, if for example they experience a
change in their circumstances.
Any instructions to alter or review instructions must be in
writing, signed by the client, and acknowledged by the
There will be a requirement in those regulations that in
that Statement of Advice the financial adviser provides an explicit
statement that he or she genuinely believes that the advice
provided to the client is in the client's best interests, given
the client's relevant circumstances.
There will also be a specific requirement enshrined in those
regulations that the Statement of Advice is to be signed by both
the adviser and the client."
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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