After six months of member consultation, the Financial Planning Association (FPA) board has focused its draft principles on conflicts of interest to four key areas.

With the removal of principles restating responsibilities under current law, the key areas of the principles include the separation of advice, administration and product fees; no preferential remuneration between the licensee and representatives; financial planners will not be advising on or recommending products that have the potential to bring the industry into disrepute; and separate corporate governance will be in place between an advisory group and any related party.

FPA Chairman Corinna Dieters says the rules will allow clients and planners to agree the cost of the advice and how it will be paid, as well as how planners will collect their fees.

“Clients can decide with their professional financial planner if they would like to pay advice fees on an upfront or deferred basis. The clients and the planner can then decide on how the planner will collect payment,” said Ms Dieters. This can be via invoice, direct debit or if a product is part of the advice, deducted from the product.

Preferential remuneration on certain products where the adviser is paid more for recommending in-house products will also be eliminated.

The FPA will now work with the Australian Securities and Investments Commission and the Investment and Financial Services Association and other industry groups to flesh out arrangements for implementation, including likely adoption dates and transition arrangements.