Financial planners’ clients may be unprotected by industry-specific consumer laws for a year following the partial adoption of the Future of Financial Advice (FOFA) regulatory system this week, according to the Association of Financial Advisers.

The Federal Government originally planned to make FOFA apply from July 1 this year, but this proved impossible because the Australian Securities and Investments Commission (ASIC) had insufficient time to provide the necessary guidance on how the new laws would be implemented.

As a result the Government has implemented FOFA on a “soft start” basis, where advisers can voluntarily “opt in” to its provisions before the full start date next July.

AFA CEO Richard Klipin told insuranceNEWS.com.au this means consumers face a period where the old “know your client” provisions which governed the relationships between financial advisers and their clients prior to FOFA will cease to apply, but the new “best interests” obligations under FOFA will not be in force if the adviser has not opted in.

“Our question is, what happens in the intervening 12 months?” he said.

“We’ve had legal advice which demonstrates there is a lack of clarity about how consumers will be protected.

“We’ve asked for clarity from Treasury and ASIC and we are seeking urgent Government intervention.”

insuranceNEWS.com.au also sought comment from Financial Services and Superannuation Minister Bill Shorten but at the time of publishing this bulletin had received no response.