Wikipedia defines “consultation” as a regulatory process by which the public’s input on matters affecting them is sought. Its main goals are to improve the efficiency, transparency and public involvement in large-scale projects or laws and policies.
There are generally three stages:
1. Notification (to publicise the matter to be consulted on);
2. Consultation (a two-way flow of information and opinion exchange); and
3. Participation (involving interest groups in the drafting of policy or legislation).
In the context of changes to the financial planning industry, the first stage of notification was when the Future of Financial Advice (FoFA) reforms were announced by the then Financial Services Minister, Chris Bowen, on ANZAC Day 2010.
This triggered the industry into action. Treasury fielded numerous visits and meetings with industry stakeholders, including product and platform providers, dealer groups, financial planners, associations, the banks, and anybody else who wanted to get their message across.
Treasury also conducted public information sessions in each capital city, all designed to help collate information, issues and concerns as part of the notification process. It is fair to say that these information sessions were at times heated, but constructive, and provided the response Treasury needed to move to the next stage.
However, the commencement of the second stage of consultation (two-way flow of information and opinion exchange) was delayed and the caretaker convention period extended as a result of a longer-than-expected election campaign, the formation of a minority government and a ministerial reshuffle. Out went Chris Bowen and in stepped Bill Shorten, and Treasury had to start again with the new Minister before finally announcing the formation of the Peak Consultation Group (PCG).
However, informal consultation commenced even before the announcement on ANZAC Day, and the FPA has had to deal with all sides of politics, Treasury, ASIC and even other industry stakeholders.
To stay on top of the issues, the FPA formed a dedicated FoFA Taskforce to tackle the main areas of concern, including:
• Fiduciary duty;
• Affordable and accessible advice;
• Opt-in; and
• Volume payments.
The Taskforce has hosted and participated in a number of workshops (some directly with Treasury), conducted a member survey, and completed working papers on these topics as part of the work during 2010. The FPA has also recently launched a FoFA information pack, which equips members with information and fact sheets about the FoFA reform issues, such as opt-in and the expansion of intra-fund advice.
The FPA has also had numerous one-on-one meetings with Treasury and the Minister to discuss these issues in more detail, as well as participating in the PCG meetings.
It is through these various forums that the FPA continues to:
• Push for opt-in to be removed from the reform agenda;
• Oppose the expansion of intra-fund advice to areas such as Transition to Retirement and Centrelink;
• Raise caution about the definition that will be adopted for “best interest” (we do not believe this should be a best advice definition); and
• Support, under a conflict management process, the continuation of volume payments (rebates) from administrative platform services to licensees.
FPA members, too, have participated extensively both directly, with their local members, the Minister, and Treasury; and indirectly, through the FPA, their licensee or other forums. This stage of a two-way flow of information and opinion exchange is not over and I would encourage all financial planners to continue to voice their concerns and get in front of their local member.
The third and final stage of the process is participation in the drafting of legislation. The Minister is to first confirm the Government’s policy positions. The Minister may conduct further consultation before finalising the policy; but once finalised, drafting instructions can be issued to commence the drafting of legislation.
Even so, one thing is for sure: when the detail is finally released, even after all the consultation, there will be surprises. You have been consulted!
Dante De Gori is general manager, policy and government relations, for the Financial Planning Association (of Australia).
