Industry bodies are pushing to extend the start date of government reforms to give the industry more time to comply.
Technology overhauls represent the biggest concern, particularly for smaller practices that have to install new IT systems but do not yet have all the detail surrounding the federal government’s Future of Financial Advice (FOFA) reforms.
Association of Financial Advisers (AFA) chief executive Richard Klipin said the AFA wanted the FOFA start date extended beyond 1 July 2012, the date set by Financial Services and Superannuation Minister Bill Shorten as the first day of compliance for the advice industry.
“We’re now going to increase our activity around saying the industry needs a full 12 months to implement, to get FOFA-ready, from the date of FOFA actually going through Parliament,” Klipin told InvestorDaily‘s sister publication, IFA.
He said massive systems changes for manufacturers, licensees and advisers and the reworking of documentation required time.
“The 1 July 2012 start date is still in all the documentation and, in our view, that needs to be pushed out,” he said.
“Having the right amount of time to get ready for FOFA needs to be factored into this space, and that means the start date needs to be pushed out as the legislative date has effectively been pushed out.”
Shorten’s office said it remained on track to have the final FOFA legislation approved in Parliament in early 2012.
Debate on FOFA begins on 31 October, but members of Parliament have been embroiled in debate on migration legislation, the carbon tax and a host of other issues. The debates have occurred against a backdrop of political wrangling in Canberra as Prime Minister Julia Gillard’s popularity ratings plumbed fresh lows.
“There’s no certainty over timing, even as we speak today,” Klipin said.
The Association of Superannuation Funds of Australia (ASFA) also wants an extension.
“We are happy to see [FOFA] start on 1 July 2012, but we want hard compliance extended a full year to 1 July 2013,” ASFA chief executive Pauline Vamos said.
FPA policy and government relations general manager Dante De Gori agreed the industry would find it difficult to meet the deadline.
“For the package as a whole, I think we’re going to struggle. Considering that we’re still working through draft legislation at this time, it’s quite conceivable that we’re not going to get legislation signed off until early next year – they’re talking February or March next year when it will actually be signed off by the Governor-General – which only leaves you a few months before 1 July.”
De Gori said most planners were smaller players and, when it came to overhauling IT systems, their finances dictated they got it right the first time.
“A lot of the details aren’t yet finalised. You need to have the details finalised before you can spend the money,” he said.
As a result, the FPA has asked that ASIC take a more lenient, educational role towards compliance in the first three to six months after the compliance start date.
“It’s ASIC’s call at the end of the day. We expect they’ll make a call on that early next year,” De Gori said.
