The FOFA revision legislation is due to be introduced into the Australian Parliament next week, where some sources say its passage could present a challenge, as the Government does not control the Senate, and the parties that do don't support it.
ASIC will be given the job of ensuring that the proposed changes are in keeping with “the spirit of the original legislation”, Sinodinos said in an interview earlier this week on the Australian Broadcasting Corporation’s Lateline news and current events show.
As reported, Sinodinos recently consulted with Australia's advisory industry on draft rules that would make it easier for advisers to receive commissions and other so-called “conflicted payments”, which had been banned by the signing into law in 2011 of a package of regulations known as the Future of Financial Advice Act (FOFA).
During the 15-minute televised interview, Lateline presenter Emma Alberici asked Sinodinos why he wanted to "[roll] back" consumer protection laws that had been brought in by the previous party's government "to ensure people get appropriate financial advice".
Sinodinos replied that it wasn't "so much a rolling back" of the laws as a clarification of them, and how they are to apply.
"The essential consumer protections remain," he said. "We're removing some uncertainty over, for example, how the best interest duty applies, and that uncertainty will actually hopefully make it better in terms of its application as a general duty for financial advisers to put the interest of clients ahead of their own."
Sinodinos insisted that he had no intention of favouring one advice "model" over another, even though, he noted, some critics had suggested that he might favour banks because he once worked for one.
"What I tried to do, and I said this at the beginning of my time when I became assistant treasurer… was [to] create a level playing field and let the different models, whether it's the sort of models based on banks, retail financial institutions, industry funds, independent advisers and others, then play it out," he said.
"But have some transparency and choice, and then let the client basically be the one who makes the choice about what they do and how they do."
As for the subject of "conflicted remuneration", defined as any benefit given to someone who provides retail financial advice that might "reasonably be expected to influence" the advice they give, Sinodinos told Alberici: "the complication with the prohibition on what's called conflicted remuneration for general advice was always that it was potentially going too far, and it was capturing… TV advertisements, website designers, anybody who might contribute to the promotion of a product."
To view the 15-minute interview and read a transcript of it on the website of the ABC, click here.
