Your Rights Under FOFA: A Consumer Protection Guide

What Is FOFA?

FOFA stands for Future of Financial Advice — a set of reforms introduced in 2013 to strengthen consumer protection in financial advice. If you have received advice from a licensed financial adviser, FOFA gives you important rights that your adviser must follow.

Your Adviser Must Act in Your Best Interests

Under the best interests duty (s961B), your adviser is legally required to act in your best interests when giving personal advice. This means they must consider your goals, financial situation, and needs — not just recommend products that benefit them. Your SOA should show evidence that alternatives were considered and why the recommended option is right for you.

Your Adviser Must Give Appropriate Advice

The appropriate advice duty (s961G) requires that the advice given is appropriate to your circumstances. If the advice does not match your stated goals or seems generic, it may not meet this legal standard.

Fee Disclosure and Transparency

FOFA requires advisers to disclose all fees and ongoing costs clearly. Ongoing fee arrangements must be renewed annually, and you have the right to opt out of paying for services you do not use. If fees are unclear or hidden, this may be a breach of FOFA requirements.

Conflicted Remuneration Ban

Under FOFA, advisers are banned from receiving conflicted remuneration — commissions or benefits that could influence their recommendations. If your adviser recommends a product where they receive a commission, this must be clearly disclosed in your SOA.

What to Do If Your SOA May Not Comply

If you believe your adviser has not met their FOFA obligations, you can raise your concerns with them directly, escalate to their licensee (AFSL holder), or contact the Australian Financial Complaints Authority (AFCA). You can also use a compliance checking tool to get an independent assessment of your SOA.

Key FOFA Consumer Protections

The Future of Financial Advice (FOFA) reforms introduced key protections: the best interests duty ensures your adviser must act in your best interests; the ban on conflicted remuneration means your adviser cannot receive commissions or volume payments that could influence their recommendations; fee disclosure statements ensure you know what you are paying and for what services; and opt-in renewal ensures ongoing fees only continue with your active consent.

These protections apply to personal advice provided to retail clients. They do not apply to general advice or wholesale clients.

Fee Disclosure and Opt-In Rights

If you have an ongoing fee arrangement, your adviser must provide an annual fee disclosure statement showing fees charged and services provided. The statement must include a renewal notice. You must sign and return this notice to authorise ongoing fees for the next year.

If you do not renew, the ongoing fee arrangement terminates. Your adviser cannot continue charging fees. This gives you control over whether ongoing advice services are worth the cost.

What to Do If Your FOFA Rights Are Breached

If your adviser breaches FOFA requirements — for example, charging fees without providing services, receiving undisclosed commissions, or failing to provide fee disclosure statements — you have several options. Lodge a complaint through the licensee's IDR process. If unsatisfied, escalate to AFCA.

You can also report breaches to ASIC. ASIC has taken significant enforcement action against licensees that breached FOFA obligations, particularly around fee disclosure and opt-in requirements.

Frequently Asked Questions

Does FOFA apply to advice I received before 2013?
FOFA reforms took effect from 1 July 2013. Advice before this date is not covered by FOFA, but may be covered by other protections. Grandfathered commissions (arrangements before 2013) were phased out and banned from 1 January 2022.

What is the difference between FOFA and the best interests duty?
FOFA is the broader reform package. The best interests duty (s961B) is one component of FOFA. Other components include conflicted remuneration bans, fee disclosure, and opt-in requirements.

Can my adviser still receive commissions?
For retail clients receiving personal advice, commissions are banned. Your adviser must be paid directly by you through agreed fees. Some exemptions apply for life risk insurance advice.

How do I exercise my opt-in rights?
When you receive your annual renewal notice, review it carefully. If you want to continue the arrangement, sign and return it. If not, you do not need to do anything — the arrangement will terminate automatically.

AFCA Complaints — What to Know

If you have a dispute with your financial adviser, AFCA provides free independent dispute resolution. In 2023-24, AFCA received 3,559 complaints about investments and advice. The most common issues were inappropriate advice, fees disputes, and poor disclosure. AFCA can award compensation of up to $1 million (with a $5.36 million cap for superannuation complaints). Complaints must be lodged within 6 years of the issue arising.