FoFA future uncertain as Palmer threatens to join opposition
Monday, 30 June 2014 4:00pm

The government's efforts to give financial advisers more certainty by passing some of the Future of Financial Advice (FoFA) reforms through regulations could be in vain as Clive Palmer suggested his party, Palmer United, does not support the measures.

Palmer United Party (PUP) leader and Fairfax representative Clive Palmer told the ABC AM program that after the FoFA regulations came in today "no investor can rely on anything that the adviser tells them, they have to take it on by themselves."

"But I'm sure that when the senate comes back this will be disallowed so investors can be treated fairly," he added.

The regulation is valid from July 1, 2014, until December 31, 2015, which means that the government needs to pass all the changes by legislation, except for clarification on the grandfathering provision.

With 33 representatives in the new Senate, the Coalition needs six extra votes to approve the amendments to the financial advice law.

But Labor and the Greens are opposing the bill, which means that the Coalition has to convince six out of the eight fringe party senators to vote in favour.

Independent Senator Nick Xenophon has already declared that he does not agree with the proposed changes and that he will not back the Coalition.

The PUP's three senators and the Motoring Enthusiasts Party Senator Ricky Muir, who recently agreed to form a bloc with them, are essential to approve the amendments.

Palmer's statement today casts a new shadow of uncertainty over a piece of legislation that has gone through major changes over the past three years.

The regulation, which comes into effect today, removes the opt-in requirement for financial advisers and the "catch-all" phrase section 961(2)(g) of the best interests' duty that asked advisers to provide "appropriate" advice to their clients."

It also bans commissions in general advice by specifying that recurring payments and payments for recommending a single financial product or commissions are considered conflicted remuneration.

From today, advisers do not need to send Fee Disclosure Statements (FDS) to clients prior to July 1, 2013, and resolves the issue of grandfathering.

Read all Financial Standard coverage of the FoFA legislation here

Correction: an earlier version of this article incorrectly stated that Clive Palmer was a Senator. Clive Palmer is a member for Fairfax in the House of Representatives and the article has been amended to reflect that. We apologise for the mistake.

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