Banking News

ABA supports FOFA amendments

(1 July 2015 – Australia) The Future of Financial Advice (FOFA) regulations announced by the Federal Government will provide the industry and consumers with much-needed clarity and certainty, according to the Australian Bankers’ Association (ABA).

ABA chief executive Steven Münchenberg said the refinements to the FOFA laws will make a number of technical amendments to enable bank customers to continue to do their banking in simple, low-cost ways.

“The ABA has consistently supported the original policy intent of the FOFA reforms and the introduction of the new and important consumer protections to require financial advisers to meet a best interests duty and to ban conflicted remuneration.

“However, we also wanted to ensure the law is targeted to raising the quality of financial advice and the conduct of financial advisers, without imposing unnecessary regulation and costs on retail banking, and with adjustments to appropriately include developments in the retail banking market,” Münchenberg said.

“It is important all Australians have access to quality and affordable financial advice, including on retail banking products. This now means that customers can receive information and advice on a range of banking products without potentially having to discuss different products with different staff.

“Commonly bank customers want to complete a banking transaction, such as discuss with a bank teller or bank specialist a home loan, a transaction account to make payments or offset their interest costs, a home and contents policy or consumer credit insurance in case they are unable to make their repayments.

“Without these technical amendments, bank customers would have faced more complex and less efficient interactions with their banks.

“We are pleased the Government and the Opposition have been able to agree to these refinements.

“Now that we have certainty about the FOFA laws, it will be important for the laws to be fully adopted by the industry and for banks and other financial institutions to provide banking and financial services to the standards expected by their customers,” Münchenberg said.

Specifically, the refinements agreed between the Government and the Opposition include new regulations to be made before 1 July 2015 to treat non-cash payment facilities, such as travel money cards, consistently with other functionally equivalent products (such as, travellers cheques) and other simple financial products.

Ensure the modified best interests duty applies to personal advice on basic banking products and/or general insurance even where provided at the same time as advice on the provision of consumer credit insurance (which attracts the full best interests duty).

Ensure the existing conflicted remuneration exemption applies to basic banking products, general insurance and consumer credit insurance on any or a combination of these three products, where an employee or agent of an authorised deposit-taking institution provides the financial product advice.

The ABA said in a statement it also supports foreshadowed changes to clarify in the law the application of the FOFA laws and to make FOFA consistent with other parts of the Corporations Act by including a wholesale and retail client distinction as well as to ensure the existing ‘mixed benefits’ and ‘intra-fund advice’ provisions operate as intended.