The federal government risks creating a Qantas-like scenario if it fails to get the right balance between regulating the advice industry and the needs of those who use advisers, an advice chief has said.
“The planning business is a bit like the dramatic turn of events we saw with Qantas over the weekend,” IOOF head of advice Michael Carter told InvestorDaily.
“If the recent changes end up taking a number of financial planning businesses out of the system, it leaves a whole bunch of clients stranded.”
Carter said the current Future of Financial Advice (FOFA) reforms had veered from their original intention “to give more people access to financial advice” and had, so far, failed to address recent product failures.
“There needs to be certainty around what’s going on so planners can provide certainty to their clients,” he said.
He said IOOF would be raising its concerns through formal input on its own to the Parliamentary Joint Committee (PJC), as well as contributing to submissions through industry bodies.
“From my perspective, we have the hallmarks of the federal government and [Financial Services and Superannuation] Minister [Bill] Shorten having what I would term reform fever,” he said.
“The flow-on from that is it just adds more and more uncertainty and undermines consumer confidence. I think the opportunity that’s come about to refer this back to the PJC is just what the doctor ordered.”
He said another troubling aspect of FOFA was the fragmented way in which it had been presented, with draft legislation for the second tranche of the reforms yet to be unveiled.
“The big concern is around the scope and the increasing complexity that seems to be coming into the drafting, things like the timetable, which seems to be getting shorter and shorter,” he said.
IOOF had made submissions along the way on various working papers and had worked with some of the industry associations on their submissions, he said.
“We’ve been making representations through those committees to Treasury and some of the government ministers,” he said.
