The newly reformed FoFA Regulations will be retained
following the failure of a disallowance motion in the Senate, but
further changes are expected later this year.
The Senate has voted against a disallowance motion to the Future
of Financial Advice (FoFA) Regulations after the Government was
able to strike a deal with several smaller party Senators.
Although the current tabled FoFA regulations remain intact it is
expected that several changes will be made by further negotiations
and amendments to the Corporations Amendment (Streamlining of
Future of Financial Advice) Bill 2014 currently before
As a part of its deal with the smaller party Senators, the
Government has detailed several changes that it plans to make,
financial advisers have important communications and
instructions signed and acknowledged by the client and adviser,
including instructions by a client to alter or review their
that a Statement of Advice (SoA) be signed by
both the client and the adviser; and
the adviser provide a statement in the SoA that they believe
that the advice provided is genuinely in the best interest of the
The Government has also committed to working with stakeholders
to create a public register of financial advisers, which is to
include the adviser's qualifications and status.
Statements of Financial Advice
In addition to the aforementioned changes to the Bill, the
Government has also committed to a number of obligations to ensure
broader disclosure in SoAs.
The Government has specified that additional disclosures
investors can expect to be stated in an SoA are:
the adviser is required to act in the best interest of their
client and prioritise their client's interests ahead of their
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
a client has the right to return financial products under a
14-day cooling-off period in accordance with the requirements
currently provided under the Corporations Act 2001; and
the client has the right to change his or her instructions to
their adviser, if for example they experience a change in their
Under its deal with the Palmer United Party, the Commonwealth
Government will have 90 days to make the promised updates. Those
changes will then need to be tabled in the Parliament which will be
followed by a vote in the Senate.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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