Alan Kohler is in good form today demanding the Coalition dump its entire FoFa reform platform. He argues:
The eight changes proposed by the Coalition, presumably written by the banks, are:
1. Allowing commissions to be paid for the provision of “general advice”, as opposed to personal advice.
2. Making the annual fee disclosure statement apply only to new clients, not existing ones.
3. Allowing commissions to be earned on execution only services where the client has received personal advice from another individual in the same practice.
4. Allowing wholesale volume rebates for planners, including on basic super products.
5. Allowing commissions to be paid by banks on all basic banking products.
6. Extending exemptions to allow commission-based bonuses to be paid to employees.
7. Extending grandfathering provisions so that commissions can be traded freely between planners, without client approval.
8. Extending grandfathering to allow commissions to be rolled over when a client transfers from a super product to a pension on retirement.
All egregious reforms if transparency and independence are your goals. One wonders why the now shelved Senator Sinodinos ever defended them. Then again, the bank lobby makes clear why at the AFR:
The breadth of the FoFA provisions also mean general advice will be more difficult to provide. Customers want to have access to free, simple and general advice. They don’t always want a full financial plan. They don’t always want to pay a financial adviser for personal advice. They don’t always want a product recommended to them, they just want basic information or advice about some options.
The bill introduced into Parliament last week not only addresses these technical and legal interpretation issues, but also the claims about commissions, by limiting the carve out for general advice.
Even those after “free, simple and general advice” want advice, not a disguised sales pitch.