At least one independent member of parliament plans to block the opt-in portion of the federal government’s proposed reforms, jeopardising what is perhaps the advice industry’s most contentious aspect of the profound changes it faces over the next two years.
Two other independent MPs said they would look closely at the measure, which had drawn the deepest concern from their financial advice constituents, who practised mainly in regional Australia.
Opt-in is the clause of Financial Services and Superannuation Minister Bill Shorten’s Future of Financial Advice (FOFA) reform package that would require clients to formally extend financial adviser relationships by signing new contracts every two years.
“That’s absolutely ridiculous,” MP Bob Katter said in relation to opt-in.
Asked whether he planned to block it, Katter said: “Yes.”
Katter, the member for Kennedy in Queensland, said financial advisers in Mt Isa, Cairns, Innisfail and other cities in his electorate, lived in the places in which they worked.
“If you live in that town and you start giving bad advice, you won’t last two seconds,” he said.
Meanwhile, Shorten’s office, which has said the draft laws would be released this month or next, said: “The government will have draft legislation ready by the spring sittings and expects to introduce the legislation into Parliament by the end of the year.”
Both houses of parliament sit this week, and spring sittings begin in September.
Independent member for Lyne Rob Oakeshott said the opt-in clause should be extended to at least five years because it would be problematic for small, regional financial planners and advisers.
Oakeshott said recently he was working on winning support for his position.
“We will be negotiating hard when the legislation hits the Parliament,” he said.
Asked whether he would block a two-year opt-in, he said: “The detail of who might do what and when is dependent on actually seeing the legislation in the first place, and the nature of negotiations is that they are fluid. We will be negotiating.”
He said he had increasing concerns about several aspects of the FOFA reforms.
“[There’s] just more and more feedback from concerned individuals about opt-in arrangements, as well as concerns about whether certain aspects of the reforms are going to achieve greater customer protection, or greater industry protection,” he said.
“This allegation continues to be explored.”
He said he looked forward to the legislation “to determine truth from fiction, and working on areas where the reforms can be improved”.
Independent member for New England Tony Windsor said he had been in talks with Shorten about various aspects of FOFA.
“The opt-in issue is one that’s been raised and one that we’ll be looking at closely,” Windsor said.
He declined to disclose whether he held concerns over other aspects of FOFA, saying he wanted to see the actual draft legislation.
“I’ll be putting my cards on the table then and I’m sure others will too,” he said.
