Shadow Treasurer Joe Hockey has called for the Gillard Government’s Future of Financial Advice (FoFA) reforms to be withdrawn pending a “full and compliant regulatory statement”.
The Corporations Amendment (Future of Financial Advice) Bill 2011 and Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 belatedly arrived before the House of Representatives last night (Monday, 19 March) but faced an immediate challenge from Hockey and the Opposition.
The FoFA reforms were scheduled to be debated by parliament last week but a congested program and procedural bickering between the Government and Opposition delayed the introduction.
While Financial Services Minister Bill Shorten’s office has committed itself to releasing a cost analysis of the proposed legislative changes, the timeframe for this remains vague.
A request by PPO for clarity from the Minister’s office had not received a response at the time of publication.
When debate concluded at 8pm last night, the House of Representatives had heard eight speakers.
A selection of quotes from the speakers:
“Perhaps the most damning aspect of this legislation is that it fails the government’s own tests for simplicity, transparency and regulatory impact,” said Member for North Sydney, Joe Hockey. “The executive director of the government’s own Office of Best Practice Regulation, Jason McNamara, said the impact analysis accompanying the legislation ‘was not at a standard that we would pass’.”
“As people know, you cannot serve two masters and sometimes when giving advice that is going to remunerate people there can be a potential for conflict,” said the Member for Moreton, Graham Perrett. “You simply cannot have a situation where financial advisers are giving apparently independent advice and, all along, pocketing benefits from the advice that they give.”
“The vast majority of financial planners want to take you by the hand and walk you towards a bright future and a splendid retirement,” said the Member for Herbert, Ewen Jones. “The Storm model could never be assumed to have that in mind. My concern is that parts of this bill are unnecessarily burdensome on businesses and that this will impact on their ability to provide affordable financial advice.”
The new measures outlined in this bill will promote the active renewal by the client of ongoing fees for advice, with opportunities for them to consider whether they are receiving value for money,” said the Member for Canberra, Gai Brodtmann. “It will also assist to disengage clients from paying ongoing fees that they should not be paying.”
“It is important that these financial advice reforms are properly considered so that we do not create a situation where the big players in the industry gain strength and power at the expense of the small to medium-sized financial planning businesses that, by and large, provide the majority of the independent, high-quality financial planning advice to the Australian community,” said the Member for Forde, Bert van Manen. “It is the small financial planning practices that are built up over 20 or 30 years that are the true professionals and pioneers in this industry.”
“Again, it is trying to balance out those clients who are already in the system against the new relationships that will be set up,” said the Member for Chifley, Ed Husic. “I am assured that these bills will have minimal financial impact on financial advisers. Of course, where an adviser has no ongoing contact with the client there will be a small administrative cost to have the client renew their arrangement with the adviser. There is obviously no way you can get around that.”
“All this opt-in measure does is add another level of administrative burden -something which the members opposite always seem eager to do – for questionable benefit,” said the Member for Ryan, Jane Prentice. “For example, this bill creates a government mandated maximum time frame, during which consumers have 30 days to submit their opt-in agreement, whether it be to enter, renew or revise an agreement. Many Australians may inadvertently fail to comply with the government mandated maximum time frame …”
“It is important that we as legislators ensure that the legal framework surrounding this industry is robust and provides the best standards of consumer protection possible,” said the Member for Throsby, Stephen Jones. “We make absolutely no apology for bringing forward legislation, like these bills, that puts the interests of the consumers first.”
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