The coalition has all but assured Australia’s financial services sector it will abolish the federal government’s reforms if it were to assume power, with the opposition’s assistant treasury spokesman suggesting Labor is without the support of the Parliament.
“We don’t believe that the Labor minority government has the support of the Parliament to press ahead with their mandatory regular re-signing of financial advice contracts change,” Shadow Assistant Treasurer Mathias Cormann said.
“We won’t be supporting Labor’s push to ban commissions on risk insurance inside super either. It is bad policy, which reduces consumer choice for no good reason.
“We hope that crossbench members in the House of Representatives will share our judgment on this.”
Cormann expressed concern for financial services businesses that had been forced to get ready for “something that hasn’t even been finally settled yet”.
“At this point we don’t even have any draft legislation,” he said.
“The government has completely mismanaged the FOFA (Future of Financial Advice) change process and created a lot of unnecessary uncertainty for thousands and thousands of businesses across Australia and their clients.
“[Financial Services and Superannuation Minister] Bill Shorten should stop his ideological attack on small business financial advisers.”
However, Shorten had given his assurance industry reforms would go ahead as planned.
A spokesman for Shorten said the government expected to see exposure draft legislation on its FOFA reforms in the spring parliamentary sitting session, with the legislation passed by the end of the year.
“The financial planning industry can expect, as promised, the reforms to begin a staged introduction from 1 July 2012,” the spokesman said.
FPA chief executive Mark Rantall said those within the industry relying on the coalition assuming power or blocking FOFA were operating a high-risk strategy.
“I think to believe that none of the FOFA recommendations would be implemented given a change in government would be a high-risk strategy and I think the timing and result of any election, to rely on the outcome of that, is a high-risk strategy,” Rantall said.
He said as it stood, financial planners would be well advised to start to prepare for a post-FOFA regime, particularly as it related to the banning of commissions on investment.
“That is not something that you can flick a switch on. It requires significant investment in re-evaluating the business’s value proposition, their client engagement process and their pricing mechanisms and all of that takes up to 12 months to implement,” he said.
“So my strong advice to any financial adviser that I talk to about these infinitives is to start working on them now.”
Elixir Consulting managing director Sue Viskovic said there was concern among financial advice licensees that their authorised representatives were not ready for change.
“They fall into two camps: they are either on their way already or they are just saying it’s all too hard,” Viskovic said.
