The federal government has hit back at suggestions it has not properly consulted with Australia’s financial services sector over its proposed Future of Financial Advice (FOFA) reforms and stated it intends to push ahead and deliver its final announcement as promised next month.
Financial Services and Superannuation Minister Bill Shorten said claims the industry was entirely opposed to the FOFA reforms, in particular opt-in, were unfounded.
“There isn’t a consensus on opt-in amongst the financial planning community. For example, the Independent Financial Advisers Association of Australia supports a mandatory annual opt-in,” Shorten said.
He said the government and Treasury had undertaken significant implementation consultation on the FOFA reforms, with Treasury consulting with a peak consultation group representing all the major industry and consumer groups.
“The government has consulted widely and heavily with the financial services sector about the FOFA reforms – everyone has had the opportunity to have their say,” he said.
“Certainly the reforms are complex – it is the biggest shake-up of financial services since [Paul] Keating introduced compulsory 9 per cent super almost 20 years ago – but most change that is worthwhile is complex and these are necessary reforms. Only one in five Australians get financial advice – the sector cannot afford to do nothing any longer.”
He said the government had worked very hard at consulting with stakeholders in order to get the reforms right, though he was aware that meant not everyone would be happy with the reforms.
“While I believe we have agreement on the majority of the reforms, I am under no illusion that some of them, most notably the opt-in provisions, remain contentious,” he said.
“There may be some people unhappy with the outcomes, but I have to weigh up the benefits to consumers against the imposition of new regulations on financial planners.”
Opposition financial services spokesman Mathias Cormann said while he was confident Treasury was across all the issues in FOFA, the question still remained as to whether Shorten would make objective decisions in the public interest.
“We all know what the problem areas in FOFA are – opt-in, the definition of statutory fiduciary duty and how it is to be enforced, the banning of volume rebates and the banning of commissions on risk insurance,” Cormann said.
“So it is well and truly time for Bill Shorten to make some decisions on FOFA so everybody knows what they’re dealing with.”
Cormann said Shorten should start by scrapping Labor’s “misguided” opt-in proposal and the banning of insurance commissions.
While neither Cormann nor opposition leader Tony Abbott have spoken out in terms of what alternatives the coalition would offer the industry, Cormann said the coalition would stand up “for good public policy”.
“We will support any sensible proposals which improve the professionalisation of the financial services industry and which remove conflicted remuneration structures,” he said.
“However, we will oppose any unnecessary growth in red tape, which adds costs for small businesses and consumers for no additional benefit.”
Commenting on the opposition’s lack of alternative reform ideas, Shorten said: “Mr Abbott and his team have shown that they don’t want to take on tough reforms that are in the long-term interests of this country.
“Instead they are happy to just say ‘no’ while proposing no credible alternative. The opposition’s lack of clarity on FOFA isn’t surprising, as it’s consistent with their broader approach to tough issues like climate change, health reform and changes to superannuation.”
