The Minister for Financial Services continues to back the federal government’s financial advice reforms despite a parliamentary report that failed to garner bipartisan support.
A spokesman for Bill Shorten told InvestorDaily the government’s Future of Financial Advice (FOFA) reforms are on the right track.
“It is clear from yesterday’s PJC [Parliamentary Joint Committee] recommendations that the government’s financial advice reforms are on the right track,” the spokesman said.
“The government’s reforms will expand access to financial advice, increase trust and underpin industry growth.”
The spokesman’s comments come a day after the PJC tabled its FOFA report in the House of Representatives.
The document was shortly followed by the release of a dissenting report by Coalition members of the PJC inquiry, its action all but providing the reforms with a stalemate.
Opposition assistant treasury spokesman Mathias Cormann said the next step for the FOFA bill is for the government to decide how to proceed.
“I call on Bill Shorten to reconsider his approach to FOFA,” Cormann told InvestorDaily.
“He should remove the contentious parts of FOFA and proceed with the important and widely supported reforms in FOFA. He should conduct a proper regulatory impact assessment before doing anything else.
“He should remove Opt-In, remove the retrospective application of the additional annual fee disclosure requirement, improve the drafting of the Best Interest Duty and delay the implementation of FOFA to 1 July 2013 to align it with MySuper.”
If the government refuses to remove “contentious” parts of FOFA, and conduct a proper regulatory impact assessment, it would be left in the hands of both the House of Representatives and the Senate to pass judgement on the reforms, Cormann said.
“Labor is in a minority government. They don’t have a majority in their own right in either House of Parliament,” he added.
“The Coalition has made a series of well thought out and carefully considered recommendations on how FOFA can be improved to a point where we could support it,” he said.
“Obviously we are hopeful that cross bench members of Parliament both in the House of Representatives and in the Senate will end up sharing our views.”
Cormann said the Coalition will be moving a series of amendments in both Houses of Parliament to give effect to the 16 recommendations from the dissenting report on FOFA.
“We will be looking for support for our amendments from the cross benches,” he said.
In response to Cormann’s call for Shorten to reconsider his FOFA stance, Shorten’s spokesman said: “The Opposition have never seen a vested interest they don’t support – whether it’s billionaire miners or financial planners.
“In relation to the regulatory impact statements, the Howard Government did not bother to thoroughly examine the regulatory impact of their Financial Services Reforms (FSR).”
The lack of bipartisan support by PJC members for FOFA leaves the reform, many believe, in a precarious position, adding further uncertainty with talk of further reforms.
FPA chief executive Mark Rantall said the PJC fails to address any of the industry issues.
“It’s quite interesting in fact, if you read the recommendation, there is also an indication that the PJC are recommending more inquiry and potentially more intervention,” Rantall said.
“It’s no wonder the Opposition has put out a dissenting report.”
Rantall said the next step for the association is to continuing to work with the Independents.
“They will hold the sway in terms of the overall outcome of the legislation that will be debated in parliament,” he said.
“We’ve also the economics senate committee’s recommendations to come down in March and we’ll be looking to see what recommendations come out of that.”
In terms of where the FOFA legislation may head, Rantall said if the reforms that are set to be debated are not modified, then the core of the legislative change (removing conflicted remuneration and implementing a best interest duty on financial planners) will not result in a good outcome for the industry.
Association of Financial Advisers chief executive Richard Klipin said the AFA is disappointed with the outcome of the PJC report.
“FOFA is the biggest change to the financial services landscape in a generation, and with such major change you want to make sure you’re on really solid ground,” Klipin said.
“We’re obviously disappointed that the majority report coming out of the PJC really ignored almost all of the evidence from those who are in the profession and the industry day in and day out.
“The reverse is true of the Coalition. Their dissenting report pretty much addresses all of the AFA’s concerns.”
Calls to Independent members of parliament were not returned by InvestorDaily‘s deadline.
