First tranche of FOFA released

PART OF THE WAIT IS OVER

The Assistant Treasurer and Minister for Financial Services, Bill Shorten, has released an Exposure Draft Corporations Amendment (Future of Financial Advice) Bill 2011 (draft legislation) and explanatory memorandum for public consultation.

The draft legislation is the first tranche of legislation intended to implement the Future of Financial Advice reforms (FOFA).

The Minister has confirmed a second tranche will shortly be released for public consultation and otherwise expressed the Government’s policy position on a number of FOFA issues.

The closing date for submissions on the draft legislation is 16 September 2011.

It is unclear whether the independents will support the draft legislation in its entirety. In any event, the Bill is intended to be passed by the Parliament in early 2012 and most of the key reforms are scheduled to commence operation on 1 July 2012.

However, the ban on up-front and trail commissions and like payments for risk insurance within superannuation is likely to commence from 1 July 2013.

This article looks at the new law proposed by the draft legislation, the content of the second tranche and other related issues.