The Federal Opposition is seeking to force Finance Minister, Senator Mathias Cormann, back into Future of Financial Advice (FoFA) negotiations, according to Senator Sam Dastyari and Bernie Ripoll, Shadow Minister for Financial Services and Superannuation.
A further motion for the disallowance of FoFA regulations was tabled in the Senate on July 16, 2014 – the day after the previous disallowance motion was voted down. This will see a further motion tabled on 26 August 2014, the next parliamentary sitting day.
Unlike the previous disallowance motion, this one is only for a partial disallowance. However, it proposes to disallow the majority of amendments made under the streamlining regulations.
“Part of putting this disallowance motion back in is about dragging Mathias to the table…we want to negotiate, we want to come to an agreement,” Dastyari says.
Ripoll adds that “we know that there was significant community outrage following the last minute back room deal that stopped the Government’s changes being disallowed by the Senate”.
“Labor’s new disallowance motion will give Senators the chance to strike out these regulations and prove they are listening to the community, not to the big banks,” he says.
FoFA debate rolls on
In a statement sure to send chills through a financial advice sector already reeling from a years-long wait for regulatory certainty, Dastyari says: “This isn’t going to go away as an issue. It is going to remain an issue for the foreseeable future”.
He stresses that the opposition is seeking genuine political change rather than simply keeping the debate going for political point-scoring opportunities.
“It’s not as if the FoFA laws were perfect. It’s natural that after the fact [being introduced] they’d be tweaked,” he says, referring to the need to make later amendments and refinements to fix any unintended consequences.
“There were a lot of things particularly around the area of grandfathering et cetera that we were comfortable with. We obviously weren’t comfortable around some of the stuff to do with best interest duty – that was a legitimate debate to have.”
Political football
Dastyari says he is concerned about the politicisation of the issues around FoFA.
“The problem we’ve got now is the debate has become increasingly political…but we need to see the best way to take the politics out of the debate,” he says.
“It’s not going to be sustainable in the long term, having a political winner-takes-all system where financial advice laws become a political football.
“The sector is increasingly telling us they want business certainty. Part of the problem is, with these FoFA changes, rather than negotiate with us and come to a compromise, they’ve now declared ‘we’re going to change these laws because there’s parts of these laws we can’t live with’.”
A legal perspective
Richard Batten, partner at Minter Ellison Lawyers, describes the move to table another disallowance motion as “a clever device by the opposition to keep the debate going…it’s very much a political move”.
He suggests that generating further debate around the FoFA regulations would again put the cross-benchers to the test, particularly the Palmer United Party (PUP), whose last-minute deal scuppered the earlier motion to disallow.
“This would be holding PUP up to the fire again,” Batten says.
“But even if they don’t change their mind, it keeps the issue in the forefront politically.”
He also suggests that the opposition could potentially table further disallowance motions up until 25 September, 2014.
“Under section 42 of the Legislative Instruments Act 2003 (Cth) a motion of disallowance may be made within 15 sitting days after the instrument was laid before the House,” Batten says.
“The streamlining regulations were tabled in the Senate on 10 July 2014. Accordingly, the last sitting day for any further motions of disallowance is 25 September 2014 based on the current sitting calendar.”
