What Is FOFA? A Simple Guide to the Future of Financial Advice

FOFA Stands for Future of Financial Advice

FOFA is a set of reforms introduced by the Australian government in 2013 to strengthen consumer protection in the financial advice industry. The reforms were a response to findings from the Parliamentary Joint Committee inquiry into financial products and services, and they fundamentally changed how financial advisers must interact with their clients. If you have received financial advice since 2013, FOFA has likely affected your rights without you even knowing it.

The reforms came into effect on 1 July 2013 (with a transition period for some arrangements) and were later supplemented by the Delivering Better Financial Outcomes (DBFO) reforms, which commenced in Tranche 1 from July 2024. The combined effect of FOFA and DBFO is a regulatory framework that prioritises consumer protection, transparency, and adviser accountability.

Best Interests Duty (s961B)

The cornerstone of FOFA is the best interests duty. This legally requires your adviser to act in your best interests when providing personal advice. They must consider your goals, financial situation, and needs — not just recommend products that are convenient for them or pay them higher commissions.

Section 961B of the Corporations Act sets out seven safe harbour steps that, if followed, mean the adviser has satisfied the duty. These steps include: identifying your objectives and financial situation, making reasonable inquiries if information is incomplete, assessing whether they have the expertise to advise you, conducting a reasonable investigation into available products, and basing all judgements on your personal circumstances. Your SOA should show evidence that these steps were taken and that alternatives were genuinely considered, not merely listed as a formality.

Conflicted Remuneration Ban

FOFA banned conflicted remuneration — commissions and other benefits that could influence an adviser's recommendations. Before FOFA, advisers could receive significant commissions for recommending certain products, creating an inherent conflict of interest. While some grandfathered arrangements still exist, the ban means your adviser should not be receiving hidden payments for recommending one product over another. Your SOA must disclose any commissions or benefits the adviser or their licensee receives.

Ongoing Fee Arrangements and Renewal

FOFA also introduced rules around ongoing fee arrangements. Your adviser must send you a fee disclosure statement each year showing what services you received and what you paid. You have 30 days to respond; if you do not, ongoing fees must stop. You can also opt out of ongoing fees at any time. These rules prevent advisers from charging ongoing fees indefinitely without your active consent. For more detail, see our consumer guide to FOFA rights.

How FOFA Affects You as a Consumer

FOFA gives you stronger rights as a consumer of financial advice. You have the right to advice that is in your best interests, clear fee disclosure, and the ability to stop ongoing fees at any time. If your SOA does not reflect these protections, it may not be compliant. Your adviser's Financial Services Guide should explain how FOFA applies to the advice they give you.

DBFO Reforms — Building on FOFA

The Delivering Better Financial Outcomes (DBFO) reforms, passed in July 2024, are the next stage of evolution. Tranche 1 removed the requirement for annual Fee Disclosure Statements, streamlined client consent for ongoing fee arrangements, and clarified rules around advice fees deducted from superannuation accounts. Tranche 2 draft legislation, released in March 2025, proposes rationalising SOA requirements, modernising the best interests duty, and removing the safe harbour steps in favour of a principles-based approach. These changes aim to reduce red tape while maintaining strong consumer protections.

For consumers, the key practical impact is that ongoing fee arrangements will become simpler and more transparent. Your adviser must obtain your renewed consent before continuing to charge ongoing fees, and the process for consent has been standardised. The removal of the FDS requirement does not mean reduced transparency — you still have the right to ask for a breakdown of fees and services at any time.

Frequently Asked Questions About FOFA

Does FOFA apply to all financial advice?
FOFA applies to personal advice given to retail clients. General advice (such as information provided to the public through a website or seminar) is not covered by the best interests duty, though other consumer protections still apply.

What should I do if I think my adviser breached the best interests duty?
Start by raising your concern directly with your adviser or their licensee. If you are not satisfied with the response, you can lodge a complaint with AFCA (Australian Financial Complaints Authority), which handles disputes up to $1 million (with a $5.36 million cap for superannuation complaints).

Are all commissions banned under FOFA?
Most conflicted remuneration is banned, but some commissions are still permitted — for example, life insurance commissions (subject to a cap and consent requirements from 10 July 2025) and general insurance commissions. Your SOA must disclose any commission the adviser receives.

Major Reforms That Shaped Today’s Rules

From FOFA to DBFO, each milestone below altered consumer protections in practical ways. Scan it to place your own advice document in context.

Date	Reform	Impact on Consumers
July 2012	FOFA enacted	Best interests duty (s961B), ban on conflicted remuneration, opt-in for ongoing fees
July 2013	FOFA mandatory	Full compliance required — advisers must act in your best interests
July 2016	Accountants' exemption repealed	Accountants need AFSL to give SMSF advice, increasing consumer protection
2018-2023	Royal Commission + response	FEAR Act (2019) — higher penalties, breach reporting, enforceable director duties
Dec 2022	QAR Final Report	22 recommendations including simplified SOAs, new adviser class, streamlined best interests duty
July 2024	DBFO Tranche 1	FSG website disclosure option, conflicted remuneration clarification
Jan 2025	DBFO changes commence	Fee Disclosure Statements removed, streamlined ongoing fee consents, legal clarity for super advice fee deductions
Mar 2025	DBFO Tranche 2 draft	SOA rationalisation, collective charging for super, super fund targeted prompts. Best interests duty modernisation and new adviser class still in development.

Sourced from ASIC, Treasury DBFO documentation, FAAA and APESB publications.