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ARTICLE · 18 DECEMBER 2014

FOFA reforms – what you need to know

ClarkeKann Lawyers
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New legislation to implement amendments to reverse and water down some of the FOFA laws is currently before the Senate.

AustraliaFinance and Banking
Kate Gardner
Kate Gardner
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WHAT IS IT?

The FOFA reforms:

  • Introduced heightened obligations on advisers to act in the best interests of retail clients and place the interests of clients ahead of their own ("Best Interests Duty")
  • Imposed a ban on conflicted remuneration structures (for example, volume based commission payments)
  • Implemented requirements for advisers to renew ongoing fee arrangements with clients every 2 years (the opt-in requirement), and
  • Imposed an obligation on advisers to send annual fee disclosure statements to clients.

These consumer protections have been the subject of much criticism and debate, with arguments that the reforms created unnecessary red tape on industry participants and are too costly to implement. In December 2013, acting on its election commitment to reduce this compliance burden on the financial services industry, the Federal Government announced a further package of changes to FOFA. New legislation to implement this suite of changes to

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