Advisers question FOFA opt-in merits

Advisers wary of the value FOFA opt-in provisions deliver.

02-Oct-2015

By Elizabeth Somerville

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Many advisers are sceptical of the value Future of Financial Advice (FOFA) opt-in provisions deliver to practices and their clients, one legal specialist working in the area has said.

They have questioned who was benefiting from the process, which came into effect on 1 July, imac legal & compliance principal Ian McDermott told financialobserver.

“The overall sentiment is, ‘we’re doing it because we have to, but we’re not convinced it’s a good or necessary policy’,” he said.

“The overwhelming sentiment is, ‘what does it actually achieve?’

“It’s yet another compliance burden that adds to costs, and on a cost-benefit scale, [I’m] not sure who’s coming out ahead.”

Some felt it made no difference to their previous operating policies, as the systems had to be set up in any case, whereas others were frustrated by the additional work required, McDermott said.

“One of the comments I got [from an adviser] was it was a little bit patronising for both advisers and clients,” he said.

“It almost seems to be an assumption that clients won’t be happy with the arrangements [and would choose to opt out].

“There was also a frustration that industry associations don’t have their professional conduct codes finalised, as these were supposed to have similar provisions that would have done away with the need to get rid of fee disclosure arrangements.”

A number of advisers had also voiced concerns that clients could be disadvantaged if, for example, due to health concerns or overseas travel, they were unable to opt in within the specified timeframe, McDermott said.

“What about genuine situations where the adviser knows [the client’s] situation well and knows they would like to continue with the arrangement, but they have to terminate it [as the client cannot respond in time]?” he said.

“It’s a real concern as it could actually disadvantage clients.”

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