The banking industry has consistently and strongly supported the original policy intent of the FOFA reforms.
Steven Munchenberg, Chief Executive of the ABA said: "The FOFA Regulations made by the Federal Government, taking effect on 1 July, provide the industry with certainty regarding its legal obligations. Certain aspects of the law need to be clarified and corrected to make sure banks and other financial services providers, and their customers and clients, have confidence that the original policy intent is properly translated into the law."
"We are disappointed that the Industry Super Australia (ISA) continues to misrepresent banks and other financial services providers. The industry has been working closely with many stakeholders on highlighting areas in the law which don't work properly and identifying areas of concern for consumer groups to make sure the law gets the balance right. The ISA is clearly running an anti-bank campaign which aims to scare consumers with misconceptions about bank practices and misinterpretations about the law. This campaign is merely an attack on businesses that are competitors to its members."
"The banking industry is not the only stakeholder group that raised concerns with the FOFA provisions seeking clarifications and corrections to make sure the law is clear for all AFS licensees, regardless of their business model. Banks and other financial services providers are subject to the same financial services laws - this is important to ensure all financial advisers and other financial services professionals meet the same legal obligations and standards. Bank staff are not the only employees in the financial services industry. Financial advisers don't just work for banks."
"The former Government made a number of changes to the law and the regulations to try and fix the operation of certain provisions, to explain the way the law is intended to be interpreted, and to ensure the scope of the law was targeted. Unfortunately, a number of the FOFA provisions remained unclear. The FOFA Regulations have addressed these uncertainties. It's important that the law is clear and works as intended. It's important for banks and other financial services providers, but moreso, for our customers and clients."
"There has been significant misinformation and misunderstanding about the technical amendments that the banking industry has been seeking. Banks support the new consumer protections introduced by the FOFA reforms, including the best interests duty and the ban on conflicted payments. These important protections are maintained. Banks want to make sure bank customers can continue to do their retail banking in ways they currently do without convoluted practices which cause confusion, frustration and additional and unnecessary costs for them."
"The ISA makes a number of incorrect claims about commissions, sales incentives and the existing law claiming the Government is introducing new loopholes or caveats. The ISA either misunderstands or misinterprets the existing law, or simply wants to perpetuate an anti-bank campaign to serve their own interests."
The Attachment provides a summary of the amendments the ABA has been seeking, why these amendments are necessary, and why the ISA claims are misleading.
Mr Munchenberg said: "The FOFA provisions have been a significant and necessary reform program. Given the extent of the reforms, it's unsurprising there needed to be some improvements to make sure the law is aligned to the original policy and doesn't have unintended or adverse consequences not envisaged when initially drafted."
"It's time for the ISA to cease its commercially driven campaign and to focus on ensuring the FOFA reforms live up to their original goals. The entire financial services industry needs to come together and support the FOFA reforms to improve the quality of advice, the availability and affordability of advice, and the professionalism of the financial advice industry."
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