The government’s proposed financial services changes have been called into question, with a legal firm concluding that they could lead to increased uncertainty and risk of litigation in the industry.
Last month, Assistant Treasurer Arthur Sinodinos released draft amendments to the Future of Financial Advice regulations, which remove some of the initial requirements around opting-in for advice
However, legal advice commissioned by Industry Super Australia has pointed out that amendments implemented as regulations could risk being declared “invalid” and “susceptible to challenge in the courts” – so that even past decisions could be declared unlawful.
The legal firm, Arnold Bloch Leibler, points out that this could open the financial advice industry to risk of significant potential future litigation.
Industry Super Australia says these findings undermine the government’s objectives for making the change.
“The advice indicates that there is significant doubt regarding the Government’s regulation-making power to make changes on ‘opt in’, fee disclosure and best interests,” Industry Super chief executive David Whiteley said.
“In light of this, industry super funds would suggest that the FoFA laws be given time to settle in and that they be reviewed as a part of the upcoming financial systems inquiry.”