FOFA Legislation Reform
Key Engagement Items:
Increase transparency and trust in the financial advice industry.
Protect consumers from conflicts of interest.
Encourage ethical and professional standards in the financial advice sector.
Legislation Focus:
The FOFA (Future of Financial Advice) legislation in Australia refers to reforms introduced by the federal government to improve the financial advice industry. These reforms were implemented following the 2009 Ripoll Inquiry, which exposed issues such as conflicted remuneration and poor-quality financial advice.
Key Features of FOFA:
Ban on Conflicted Remuneration
Bans commissions and other forms of conflicted remuneration that could influence financial advice.
Best Interests Duty
Requires financial advisers to act in the best interests of their clients and prioritize client interests over their own.
Fee Disclosure Statements (FDS)
Financial advisers must provide clients with annual fee disclosure statements that clearly outline fees charged and services provided.
Opt-In Requirement
Advisers must seek explicit client agreement every two years to continue charging ongoing fees (unless exempt).
Scaled Advice
Enables clients to receive advice on specific financial products or topics rather than comprehensive advice.
Implementation QA Delivery Timelines:
Introduced by the Corporations Amendment (Future of Financial Advice) Act 2012 and the Corporations Amendment (Further Future of Financial Advice Measures) Act 2012.
Took effect on 1 July 2013, with some provisions being voluntary until 1 July 2014.
QA Focus:
End to end planning
Budget and resource estimations
QA/Test strategy
Technical Testing
Non Functional Testing
Business/User Acceptance Testing
System Testing
Integration Testing
Stakeholder communication
Compliance verification