Division within the Parliamentary Joint Committee (PJC) is likely to lead coalition members of the committee to table a separate minority report on the government’s financial advice reforms, an advisory industry body’s political strategist said.
Association of Financial Advisers (AFA) political strategist and former NSW Liberal party leader Kerry Chikarovski said the PJC was divided on the Future of Financial Advice (FOFA) reforms.
“I think you can be reasonably confident that there’s division within the committee on what that report is going to say, so that there will be two committee reports, one which will be the minority report from the coalition,” Chikarovski told an AFA gathering.
Mathias Cormann, assistant treasury spokesman for the opposition and PJC member, has been an outspoken critic of certain aspects of FOFA, particularly the requirement that advisers get clients to opt into their relationship by signing a fresh contract every two years.
In October last year, the government admitted to breaching the Office of Best Practice Regulation requirements in changes to its FOFA reforms after questions from Cormann before the Senate Estimates. As a result, Senate called on the PJC to review draft FOFA legislation.
At the PJC public hearing last month on the reforms, Cormann called for a full regulatory impact assessment of FOFA. However, PJC chair Bernie Ripoll said assessments had already been done but had not been made public.
The PJC is set to table its FOFA report on 29 February and Ripoll has said the committee will meet that deadline.
Meanwhile, Chikarovski said divisions within the government would delay FOFA.
“The reality is the next week or so is going to be an extraordinarily difficult one in politics for the Labor party,” she said.
“What that means, in terms of legislation for the industry, is it’s not going to be the number one priority when they go back to Parliament next week.”
Financial Service Minister Bill Shorten has already indicated Parliament would not debate FOFA until after the PJC had tabled its report.
“Divisions within Labor party are such that they’re going to have to sit down and work out a compromise for the party, and therefore the government, to move forward,” Chikarovski said.
“It’s not in the best interests of the country to have a government that is so focused on itself that it can’t focus on what it needs to do to run the country.”
In terms of the government’s reaction to the Future of Financial Advice (FOFA) reforms, Chikarovski said support of the Independents and the Greens will be central to minimising the reform’s unintended consequences.
Chikarovski, along with AFA chief executive Richard Klipin and other delegates, will be in Canberra next week, lobbying Independents, Greens and the Coalition on mitigating the “unintended consequences of FOFA”.
FOFA would be the subject of at least three Parliamentary reports, Chikarovski said.
There had already been the report from Bernie Ripoll’s Parliamentary Joint Committee, and Chikarovski predicted that the senate committee would produce two reports: one from the minority political parties, the other from Labor.
Both the Independents and the Coalition doubted that FOFA, in its present form, would have a “positive outcome”, she said, and that it would be an “administrative nightmare”.
Chikarovski doubted the legislation would go through “within the next few weeks” and probably not before the Budget.
The AFA would continue to “agitate with the Liberals and the cross-benchers to persuade the Government” to amend the legislation.
“We will continue this process,” Chikarovski said, “and focus on policy. This is all about politics, so we have to go to Canberra. It’s not over until the votes are taken, so we will continue to lobby.”
