FoFA challenged as Coalition ups ante

Elements of the Future of Financial Advice (FoFA) reform may illicit radically disparate views but what cannot be questioned is the action it has demanded from the industry.

Tony Virtue of Virtue & Partners says the profound impact of the proposed FoFA reforms on millions of people around the country have spurred him into political action.

He was amongst the representatives of six adviser associations to attend a Liberal Party lunch in Sydney with Senator Mathias Cormann, Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation, as guest speaker.

“We can’t be a protected species as an industry but some of FoFA has been beyond the pale,” Virtue explains. “Two or three years ago, I would not have attended a function like this. This is what FOFA does. It forces you to get up and do something.”

Sharing some of his concerns and a table at the event were representatives of the Association of Financial Advisers (AFA), the Association of Independently Owned Financial Planners (AIOFP), the Boutique Financial Planning Principals’ Group (BFPPG), the Corporate Super Specialist Alliance (CSSA), the Financial Planning Association (FPA) and the Self-Managed Super Fund Professionals’ Association of Australia (SPAA).

Virtue, who is a member of all six, said the presence of the association heads reveals that although each association has a different view of the world, they have more in common than they have differences.

“I’m very proud of the contribution each and every association has made,” he said. “It’s a bit like going to a party. You have a different perspective, based on where you are in the industry. But we have much more in common than what makes us different.”

Senator Cormann used the lunch to formally call on the Minister for Financial Services and Superannuation to delay the implementation of FoFA legislation.

Asked whether the Coalition, if it were in power, would reverse the tax penalties recently imposed on people who have inadvertently exceeded their concessional caps, he said that “people who make inadvertent errors in relation to excess contributions should be able to rectify those errors” and “there might be fees with processing it, but not the sorts of penalties they are currently exposed to”, adding that the Coalition was currently looking at the issue and could not make any comment about what they might do retrospectively.

In a response to a call to have adviser fees made tax deductible, Senator Cormann said that it was a Budget issue.

“Right now the Budget is in a very bad state … I understand that financial advisers around Australia have the aspiration of having their fees made tax deductible,” he said. “It’s something that will be in the mix of the whole issue, once the Budget is in surplus.”

Senator Cormann echoed adviser concerns around trusteeships, reporting standards and corporate governance of industry funds.

“The Cooper Review made some very sensible recommendations on how corporate governance and transparency could be improved,” he said.

“The Government has been very unenthusiastic about this. We think there are some pretty basic things that should happen very quickly… We do have to have better arrangements around broader competition, around management of perceived conflicts of interest in terms of directors who want to sit on multiple boards…  There should be better management of conflicts in relation to Labor Party transactions and there should be increased transparency around investment performance; there should be a more level playing field around a couple of requirements for all superannuation funds operating in Australia.”

“These are some issues we are likely to pursue in the context of MySuper legislation that is coming out,” Senator Cormann added. “We are going to be moving amendments along those lines to all these sorts of issues.”