News Column

ABA Continues to Support FOFA

May 22, 2014



SYDNEY, May 22 -- The Australian Bankers' Association issued the following news release:

The Australian Bankers' Association (ABA) said today that Industry Super Australia has misrepresented the banking industry around the FOFA reforms.

Acting CEO of the ABA, Diane Tate, said the banking industry strongly supports the original policy intent of the FOFA reforms, including the best interests duty and the ban on conflicted payments.

"The FOFA provisions introduced important consumer protections. We are only seeking technical amendments which will clarify and simplify the operation of the law, while maintaining these new consumer protections."

"The ABA is not seeking changes to enable banks to charge or re-introduce commissions. The ABA is not seeking changes to dilute the best interests duty. Any claim to suggest otherwise is simply false," Ms Tate said.

Ms Tate said FOFA was never intended to include all employees across the financial services industry, even staff in non-customer facing roles. It was never intended to include bank tellers and bank specialists who provide information to customers wanting to open a bank account or get advice on other basic banking products.

Ms Tate said bank staff do not get paid commissions. Bank staff receive a salary and may have access to a performance bonus paid subject to a balanced scorecard.

"The ABA is seeking changes to the existing basic banking exemptions implemented by the former Government to address the overreach of the law. At the moment, those exemptions don't work properly and would result in customers having to speak to a different banker about a bank account or a home loan or general insurance product or consumer credit insurance. We know this will frustrate customers and bankers if they can't complete their retail banking transactions with one person."

"The technical amendments the ABA is seeking is only to ensure that customers can do their banking in simple, easy and low cost ways like they do now. These changes will also make sure consumers can continue to get free, simple, general advice on financial products from their bank branch, their bank website and even off their smartphone."

"FOFA was designed to improve the quality of personal advice from financial advisers. Financial advisers, whether they work for a bank, credit union, industry super fund or any other type of financial institution will need to meet the best interest duty if they provide personal advice to retail clients on investment products. The banking industry fully supports the best interest duty," Ms Tate said.

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