This legislation includes:

• Banning of commission on financial products
• Banning of conflicted advice
• Fiduciary duty – putting the client’s interests first
• Annual specific fee disclosure to the client
• Opt-in where the client gets a clear statement and chance to review their service and cost arrangements with their adviser – that is, opt to continue or terminate

These are all excellent initiatives – and what the consumer deserves. Of course, many of us practice these standards anyway, but with over 94% of the financial advisers in Australia tied to product manufacturers (banks, insurance companies and other institutions) this is clearly a big ask.

Despite these changes having been on the table for over two years, the Financial Services Council (FSC), which represents many of the product providers, and the Association of Financial Advisers (AFA), representing a number of insurance advisers, have stepped in at the last minute pleading with the Government for a further 12 month deferral, as they claim they are not ready to comply.

All this demonstrates just how convoluted the Australian financial industry has become. After all this time and lead-up, it cannot separate professional advice from product sales or untangle the intricate web of commission payments, shelf space fees and volume-based incentives that exist. More importantly, it is incapable of delivering absolute transparency to the consumer.

Professional unbiased financial advice can only be provided by independent firms who have no affiliation or financial arrangement with investment product or service providers.

In my opinion, the perfectly reasonable hurdles put in place by the FoFA can never be met by the existing industry structure. There are too many snouts in the trough taking payments that can’t be justified to the consumer; and too many conflicts forcing advisers to recommend products based on their affiliation, not the benefit to the consumer.

I believe FoFA is a flawed legislation with honourable intention. What we still need is an industry restructure and a separation between professional advice and financial product – full stop; end of story. Nothing else will solve this problem. Joint regulation between ASIC and the Financial Planning Association of Australia (FPA) seems to be the only logical solution to this vast problem. The FPA already has degree-based education standards, a Code of Ethics and Professional Standards and disciplinary arrangements.

But don’t hold your breath waiting for effective major change.

In the meantime, I urge consumers to seek out highly qualified, independent advisers who can demonstrate that they are absolutely free of conflict with product or service providers; who can clearly and specifically stipulate their fees; who do not receive any financial reward from any other party to the client transaction; and who have absolute commitment to their clients’ wellbeing.