Calls for a deferred start to the government’s financial advice reforms are growing louder following the Senate Economic Committee’s (SEC) request for submissions ahead of its mid-March report date.
The SEC is set to report on the first tranche of Financial Services and Superannuation Minister Bill Shorten’s Future of Financial Advice (FOFA) reforms on 14 March 2012 after the Senate referred the draft laws two weeks ago.
The report would follow the Parliamentary Joint Committee (PJC) on Corporations and Financial Services’ verdict on the reforms, which is due on 29 February, pushing back the timeline for getting the FOFA reforms through both houses of Parliament.
Persistent delays have raised anxiety levels in the financial advice community, which is working without a net to prepare for the 1 July 2012 FOFA start date without seeing any final legislation.
Macquarie Adviser Services head of government relations David Shirlow said parliamentary sitting time after the reporting dates for the passage of FOFA legislation would be limited.
“It would appear that it would be possible for legislation to pass by the end of March, but far more likely for it to pass in May,” Shirlow said.
The SEC said the deadline for submissions was 6 February 2012.
“Macquarie will certainly participate in development of submissions in relation to the inquiry,” Shirlow said.
He said inquiries by the PJC and the SEC provided opportunities for further input, but made for a tighter timeframe in which to prepare for the reforms.
“It seems inevitable that the time between enactment of the legislation and the operative date currently proposed – 1 July 2012 – will be very short,” he said.
“We won’t have certainty about the precise provisions of FOFA until enactment, so the short lead time will make it difficult for many financial services businesses to implement any necessary systems, procedural or other changes.”
Shorten has yet to table the second tranche of FOFA, another factor which is spurring angst as delays eat into the time between the final law and compliance.
Paragem managing director Ian Knox said the proposed start date was “impossible”.
“It seems inevitable that if full legislation is made clear in the first quarter of next year, it will be physically impossible to implement it by July 2012, particularly when it comes to systems and implementation,” Knox said.
He said the adverse ramifications of FOFA had not been thought out, prompting drafters to return to the drawing board.
“In the process of doing that, they are obviously deferring implementation,” he said.
Association of Financial Advisers (AFA) chief executive Richard Klipin reiterated the AFA’s view that government implementation of FOFA should commence 12 months after the date the complete legislation passed both houses of Parliament.
Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos also reiterated ASFA’s view that the government should provide a full 12 months before hard, or legally enforceable, compliance began.
“Absolutely start it on 1 July 2012, but there are many examples where laws have started and the industry has been given one to two years to comply,” Vamos said yesterday.
