A Labor government would move quickly to implement all of the recommendations in the Hayne royal commission’s final recommendations, shadow treasurer Chris Bowen said.
“Almost anything is manageable,” Bowen said, when he described what an implementation of the royal commission’s final recommendations would look like under a Labor government, during an exclusive interview with Professional Planner and sister publication Investment Magazine on Wednesday.
“Rather than reject any recommendations, a Treasury implementation task force would…consult closely with industry to manage unintended consequences,” Bowen explained.
Since the swing away from the Liberal Party in former prime minister Malcolm Turnbull’s seat of Wentworth in October, industry and political pundits have begun to contemplate the possibility of a change in government. The next federal election must be held by May next year.
In Bowen, the financial services industry should expect a seasoned politician who has learned from the times he has locked horns with lobbyists.
“I was there for FoFA [Future of Financial Advice],” Bowen said. “I have the advantage now that I didn’t have then, in that I have been around the track a few times. One thing I learned from FoFA was to keep going.”
Bowen was careful to steer clear of pre-empting the recommendations of the royal commission but when pressed on whether it would be necessary for legislators to separate product and advice forcibly to address the industry’s inherent conflicts of interest, the shadow treasurer did note that thinking relating to the structures appears to have evolved in recent months.
“At the beginning of the royal commission, you probably would have not predicted [Commissioner Kenneth Hayne] would weigh into [vertical integration] as much as he did,” Bowen said. “At the end of it, we’ll have to wait and see, but it’s interesting to note several banks, you could say, are reading the writing on the wall.”
The Commonwealth Bank of Australia last week sold its asset management business to a Japanese bank and it still has plans in place to demerge its wealth management businesses; ANZ sold its dealer group businesses to IOOF last year and National Australia Bank has said it will spin off its wealth assets in 2019.
“Looking at some of the evidence during the hearings, you would expect the royal commission to be considering [separation of product and advice],” Bowen said.
As the advice industry prepares for a raft of incoming new education standards from the Financial Adviser Standards and Ethics Authority, which Coalition government ex-financial services minister Kelly O’Dwyer introduced, Bowen commented that education standards shouldn’t be considered sufficient to achieve the cultural reform necessary to propel financial advice towards becoming a profession.
“You can be ethical without a diploma,” Bowen said. “The point I want to make is this: don’t confuse education with culture.”
When Labor was in power, Bowen said, it didn’t address education standards of financial advisers because the government at that time was dealing with more pressing issues.
“We were dealing with, in some instances, crooks and charlatans. We weren’t at the stage of getting letters after people names,” he said.
The extended interview with Bowen will appear in the December issue of Professional Planner.