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 as:

  • "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 laws);
  • 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 adviser.

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."

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