The Future of Financial Advice (“FOFA”) reforms are a package of significant reforms for financial advisory businesses, which became mandatory on 1 July 2013.
The FOFA legislation package is contained in the following two Acts:
Prospective ban on conflicted remuneration
There will be a prospective ban on conflicted remuneration structures, including commissions and volume based payments. But, this ban is subject to certain exclusions, for example:
Best interests duty
When providing personal advice to retail clients, financial advisors will be subject to a statutory duty to:
Advisors should also be aware that:
Financial services businesses need to ensure that their payment structures comply with the conflicted remuneration ban for their retail advisory and retail investment product distribution businesses.
Financial services businesses also have to familiarise themselves with Regulatory Guide 246 – Conflicted Remuneration (“RG 246”), and in particular, ASIC’s guidance about when an employee’s performance benefit may be conflicted remuneration (see RG 246.124).
As a result of the introduction of FOFA reforms, the One Investment Group has seen a substantial increase in the level of enquiry for financial planning groups to establish both registered managed investment schemes and unregistered managed investment schemes. Members of the One Investment Group act as responsible entity or trustee for in excess of 100 trusts. Should you be seeking to establish a managed investment scheme, please contact us to discuss further.