Financial planning reforms finally pass

The Government’s financial planning laws have passed, albeit in a different form than originally proposed.

The Future of Financial Advice reforms, designed to boost consumer protections after the collapse of Storm Financial and Trio Capital left the firms’ clients out of pocket, passed the House of Representatives on Thursday, 22 March 2012.

This followed last-minute negotiations between Financial Services Minister Bill Shorten and independent MP Rob Oakeshott.

But the requirement for financial planners to contact their clients every two years to renew their agreement has been watered down, with members of professional bodies or professional codes approved by the securities regulator now exempt from that requirement. The changes are effective in 2015.

Under the original plans, planners were required to contact their clients every year to ‘opt-in’ for service, but this was nixed amid a lobbying campaign from planners and wealth managers warning that FOFA would cause mass job losses and disproportionately hurt small businesses.

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