The Federal Government will be introducing the Future of Financial Advice (FOFA) legislation in stages.

In a surprise move in the House of Representatives last week, it introduced the first bill covering the opt-in requirements and increasing the powers of the Australian Securities and Investments Commission.

But missing from this bill was the “best interest” obligations, despite reference being made to them in the new legislation.

A spokesman for Financial Services Minister Bill Shorten told insuranceNEWS.com.au legislation covering the “best interest” obligations will be introduced into Parliament during the next sitting in the first week of November.

Introducing the bill in the House, Mr Shorten said the changes are both “pro-business and pro-consumer”.

“These measures constitute a growth strategy for the financial planning and advice industry,” he said.

Mr Shorten said the bill was formulated after the Government undertook an “open-minded consultation process”.

He thanked consumer group Choice, the industry superannuation funds and the Financial Planning Association (FPA) for improving financial advice.

But the FPA has not returned the praise, with CEO Mark Rantall saying the association’s opposition remains “vehement” and that it will “vigorously hold the line on points of difference”.

“Ignoring significant industry opposition, the Government has included opt-in provisions in the bill,” Mr Rantall said.

“We are disappointed with how the legislation has been drafted and by the amendments made to FOFA Tranche One and do not support this bill as it currently stands.”

Association of Financial Advisers (AFA) CEO Richard Klipin says the bill will “decimate” small business advisers.

“It is almost inconceivable in the 21st century that a government would put forward legislation that intentionally annihilates the small business sector of an industry while pandering to another sector, and then dress it up as acting in the best interests of consumers,” Mr Klipin said.

“The minister has the audacity to pretend that it is a plan for growth for the financial advice industry.”

Shadow Financial Services Minister Mathias Cormann says opposition to the bill – especially its opt-in proposals – will continue.

“[Mr Shorten] continues to press ahead with a completely unrelated vested interest agenda against small business financial advisers, egged on by his friends in the Industry Super Network,” he said.

“Opt-in was never part of the Ripoll Inquiry recommendations, which conducted a thorough inquiry into financial products and services in the wake of the Storm Financial collapse. 

“The truth is that Bill Shorten is conflicted when it comes to pursuing regulatory changes to the financial services industry.”

The bill will now move to the Parliamentary Joint Committee on Corporation and Financial Services for further debate.

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