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The professional obligations of financial planners trump those of their employers and should guide their behaviour in dealing with practices or processes that ... [more]
FoFA delays possible says Shorten
- 21 February, 2012
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If it takes longer than July 1, 2012, and people need slightly longer to transition, we’ll do that, says Bill Shorten.
The Minister for Financial Services and Superannuation, Bill Shorten, has given the clearest indication yet that the government will delay the implementation of its Future of Financial Advice (FoFA) reforms past July 1 this year.
The minister says the Government is prepared to listen to practical concerns about the implementation of FoFA, but will not be swayed by ideological objections.
“When we talk about the transition period on matters like FoFA, the ideological objectors who just do not want to change, the financial planners who do not want to change, who want to be able to keep taxing people’s accounts without ever getting a renewed mandate, without checking with their customers – those guys are not going to like our changes,” Shorten says.
“But the practical objections and concerns about implementation timetables and costs of software, well, we’re totally up for being pragmatic about that.
“So we’ll finalise our position on a range of issues; we want to get on and do it quickly. I accept that people are sick of change [and] we will make sure our FoFA implementation understands the realities of implementing the change.
“In other words, if it takes longer than July 1, 2012, and people need slightly longer to transition, we’ll do that.
“But if you’re just secretly objecting to removing conflicted remuneration structures, if you just want to be able to sell your old practice at six times annual value rather than four times, then nothing I say is going to make you happy.”
The minister says the Government will announce its position on the arrangements to replace the so-called accountants’ exemption within a fortnight. However, he was unimpressed by full-page daily newspaper advertisements taken out by accountants’ professional organisations that sought to influence the debate.
“If any of you ever want to take a newspaper ad out to get my attention on something, make me a little promise: give the money to kids in Africa or disabled kids or indigenous health, and just ring me [instead],” Shorten says.
“We’re going to deal with the accountants’ exemption in the next two weeks. It’s good if you want to let people know that you’re a tough organisation and you’re not taking a backward step. But I don’t know [whether] when I was in a union I ever thought about putting an ad in the [Australian Financial Review] to make my point.
“On the accountants’ exemption, let me just state to you – I won’t make the final announcement – but let me state to our principles. We want it to be cost effective; we want people to be able to provide advice; obviously it should be governed by a regime of some rules. We want it to be simple.
“We will not get the accountants’ exemption wrong. We are practical people. I listen carefully to the regulators, I listen carefully to SPAA, I listen carefully to the IPA and if the others want to ring, I’ll listen carefully to them.”
Minister Shorten says that the government understands it must get “auditors’ registration at the same time”.
“I am conscious about not putting two more barriers in,” he says.
“I know we’ve got Stronger Super – and I think that’s a good thing. We’re putting in MySuper. I know that’s not a direct issue for SMSFs, and most of Stronger Super is not an issue for SMSFs, but let me just reiterate why we’re doing this.
“If we’re going to mandate compulsory savings, if we’re gong to create a giant wealth management industry, then we want to make sure that consumers do not unduly get their ticket clipped on the way through to retirement.
“I do not believe it costs 200 basis points and 180 basis points to run some of the super funds, and some of the fees I see charged – I just do not believe it.”
Bill Shorten was speaking at the 2012 SPAA National Conference in Sydney.
Bill Shorten said: “When we talk about the transition period on matters like FoFA, the ideological objectors who just do not want to change, the financial planners who do not want to change, who want to be able to keep taxing people’s accounts without ever getting a renewed mandate, without checking with their customers – those guys are not going to like our changes.”
Bill, I have checked with my customers and guess what? They think it is more red tape and very rich coming from you considering your government charges them a super contributions tax of 15 per cent just to build their retirement funds and leaves me asking what do you do for that exactly? That is right nothing … no renewed mandate or the ability for opting out of that is there? Lucky you and your polly super Bill…never mind the many small business owners that your opt in and annual renewal notice laws are going to stuff mate. It is not that we do not want change it is just that we object to some of your ideoligies which help few and raise costs for many so why not be daring and do something useful to help raise the number of Australians seeking financial planning advice by offering them an incentive such as a tax deduction on the fees?