While a combination of common sense and collective lobbying has eventually prevailed to give financial planners another 12 months before they must comply with the Tax Agent Services Act (TASA), the speed with which certain elements in the mainstream media resorted to bashing the industry on this issue was duly noted.
It is indisputable that a great deal of financial planning advice does involve either an aspect of tax advice or implications for the client’s broader tax arrangements. The various industry bodies have acknowledged this but questioned the detail, timing and urgency of their members being brought into the TASA regime.
In this respect it is impossible to consider the new legislation away from the backdrop of the Future of Financial Advice (FoFA) reforms. The bottom line is that TASA is an additional burden on advisers already overwhelmed with the FoFA changes and to impose further compliance via rushed legislation is simply unreasonable.
Richard Batten, a partner at Minter Ellison Lawyers, believes it would be “irresponsible” to saddle the industry with further legislation, especially when most of the detail is still lacking, adding that government had progressed the amendments with “undue haste”.
“It’s another issue for the industry to deal with and there isn’t necessarily the capacity in the time available,” he said. “With the FoFA changes, people haven’t really focused on it and the expectation has been that it would be delayed.”
Jumping at shadows
However, the impact of FoFA and the fact that the Best Interests Duty will catch many of the TASA provisions anyway has largely been glossed over by some commentators who have been only too happy to put the boot in.
In a prominent column in the Australian Financial Review this week, the state of play with financial advice change was summarised as follows:
“But for far too long, the ‘training’ of many financial advisers was laughably minimalist. It was more a matter of luck whether potential customers ended up with a decent adviser or a dud. That’s why the government has tried to institute (modest) long-term reform of the industry …”
As Mark Rantall, CEO of the FPA told Professional Planner, this is arguably a justifiable summation of the industry ten years ago but a significant majority has moved on.
And while FoFA has its genesis in the high-profile failures of Storm Financial and Trio Capital, it is far more difficult to find examples of financial planners giving such systemically poor tax advice that it justifies such urgent reform.
“I am not aware of any specific example of a financial planner being investigated over the tax advice given,” says Batten, adding that, in his view, advisers are adequately assessed on tax strategies in the course of completing RG146.
Rantall agreed saying there was no evidence from the Financial Ombudsman Service (FOS) or the Australian Securities and Investments Commission (ASIC) of planners struggling in this area and that much of the reaction was largely “jumping at shadows”.
One would have thought that it was quite obvious why this legislation was being hastily implemented. Blind Freddy would see two factors coming forward. One is a union dominated government that wants as much of the investment funds to go through Union funds and then into Government coffers and the other is some accountants that do not like the idea of Financial Planners having access to THEIR clients details and funds. Possibly the first one is the worse one. There needed to be some changes but the changes instigated with FoFa were over kill and with the Government driving ASIC only the demise of an industry will result.