A Liberal government would revisit the Future of Financial Advice (FoFA) reforms as part of new policy paper aimed at formalising a wider commitment to cutting costs.
The Policy to Boost Productivity and Reduce Regulation paper outlines coalition plans for reducing the regulatory burden on individuals, businesses and community organisations by establishing and meeting a red-and-green-tape reduction target of at least $1 billion a year.
While the 28-page document has little new to say on the detail of FoFA, it does promise to “amend the legislation to reduce compliance costs for small business financial advisers and consumers who access financial advice”.
Senator Mathias Cormann and his Liberal Party colleague Senator Arthur Sinodinos have been championing the deregulation cause since early 2012 and have repeatedly cited FoFA as an example of intrusive, expensive and burdensome regulation.
According to the Insurance Council of Australia, the FoFA package will cost an estimated $700 million to implement and impose a $375-million compliance burden on the financial services industry each year.
Liberals cry foul
The Liberal Party again committed itself to amending the legislation according to the 16 recommendations made as part of the Parliamentary Joint Committee inquiry into FoFA.
These include the complete removal of opt in, the simplification and streamlining of the additional annual-fee disclosure requirements, improving the best interest duty, providing certainty around the provision and availability of scaled advice, and refining the ban of commissions on risk insurance inside superannuation.
The paper is also scathing on the Labor government’s use of regulation impact statements.
“Under Labor’s own rules, government departments and agencies are required to prepare regulation impact statements for regulatory proposals that are ‘likely to have a regulatory impact on business or the not-for-profit sector, unless that impact is of a minor or machinery nature and does not substantially alter existing arrangements’,” it states.
“In numerous cases – including the Mineral Resources Rent Tax (Mining Tax), the Fair Work industrial relations system, the National Broadband Network, the Future of Financial Advice changes and the suspension of live cattle exports to Indonesia – the Prime Minister granted an exemption due to alleged exceptional circumstances without providing any justification.”
The coalition also has some concerns over the regulators tasked with delivering policy and regulatory certainty.
“There have, however, been many instances of regulators providing incorrect and inconsistent guidance and advice,” it states.
“This poor advice results in businesses having to pay costly fees for consultants or accountants to navigate the maze of regulation. At times, this has also resulted in businesses or individuals finding themselves subject to legal proceedings or penalties for actions, which they took in good faith, based on advice about regulatory requirements provided to them by bureaucrats who later turned out to be mistaken.”
