Uncertainty over the timing of the government’s financial advice reforms could catapult the cost of systems testing sharply higher, ANZ’s general manager of advice and distribution said yesterday
“If we don’t get good clarity on the transition period by Christmas, it could double our costs,” Paul Barrett told reporters.
“Assuming a 1 July 2012 deadline, if you don’t get clarity around deadlines, you’ve got to start opening systems up, you’ve got to start lifting the bonnets on various product systems and you’ve got to start changing the way you do things.
“We’ve calculated that Christmas is about the drop-dead date before we actually have to start opening up all these product systems, assuming the thing is going to be done on 1 July next year.”
Barrett said ANZ’s team of systems developers was forced to create two or more alternatives because preparation for the final policy was largely guesswork.
“There might be two alternatives, so you’ve actually got to make two changes to your system, not knowing which one is going to come in,” he said.
He said a full year before compliance would allow time to await the release of the exact legislation.
“The incremental cost of having to run two different systems and opening the bonnet on these things twice is incredible. It’s almost like a J-curve in terms of costs,” he said.
Financial Services and Superannuation Minister Bill Shorten’s Future of Financial Advice reforms are unlikely to be debated in Parliament before late March, after the first tranche was referred back to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services and the Senate Economics Committee (SEC). The PJC is set to release its recommendations at the end of February and the SEC in mid-March.
Shorten’s office had initially expected the reforms, which centre on banning conflicted remuneration and increasing Australians’ access to advice, to pass through Parliament by October, but later pushed the target timeframe back to the end of the calendar year.
Throughout the process, the government has held the implementation date at 1 July 2012, but calls have been growing from the financial advice, funds management and superannuation industries to allow a full year from the date the draft legislation passes through Parliament.
“We are very interested in what that transition timetable is going to look like – whether there’ll be a transition, whether it’s going to be a hard launch on 1 July 2012 or a soft launch – we don’t know the answers to these questions,” Barrett said.
“We’d just like clarity over this one way or the other. Whether it’s 2012 or 2013, we’d just like clarity.”
Aligning FOFA compliance with the 1 July 2013 start of MySuper reforms to superannuation would also save money, he said.
“The big one for us is alignment of FOFA with MySuper. That’s a key one because if we don’t get that, we have to open product systems more than once. We have to open them twice, three times,” he said.
“If we get that alignment, we can open the product system once, take the deep dive, fix everything we have to fix, change everything we have to change, then shut the thing. Done.”
