The Future of Financial Advice (FOFA) bills have passed through the Senate as expected, with few surprises and even less debate.
While Minister for Financial Services and Superannuation Bill Shorten today welcomed their passage, the opposition slammed Labor for not allowing a comprehensive debate on its 63 separate amendments.
The reforms will still commence from July 1, 2012 as originally announced but the application of the provisions will be voluntary until July 1, 2013.
According to government, this “soft start” strikes a balance between consumer needs and industry requirements by giving the financial advising community more time to prepare for the reforms, while still giving early movers the opportunity to provide commission-free advice from July 1, 2012.
The government is consulting on whether the term financial planner or adviser should be defined in the Corporations Act.
“In light of the passage of FoFA, I am seriously considering accelerating the timetable for the resolution of this matter. I will have more to say about this matter shortly,” said Shorten in a statement.
“This is an important day for the future of financial advice in Australia. The FoFA reforms will drive greater competition and innovation and are a long-term growth strategy for this important industry.
“I am encouraged by the broad level of support for positive change from across the financial services industry.”
No surprises from opposers
Predictably, there was little agreement from the opposition on the morning’s events, with Mathias Cormann, shadow minister for financial services and superannuation, accusing Labor of refusing to engage in debate.
“Labor has arrogantly shut down debate in the Senate and rammed through its flawed Future of Financial Advice legislation without allowing any debate at all on 63 separate amendments,” he said.
“The government even gagged debate on its own confusing and convoluted amendments that would introduce a complex floating start date for FoFA, with a soft-start date on July 1, 2012 and a hard-start date one year later.”
Aside from specific concerns over controversial components of FoFA such as opt in, Cormann said it was “extraordinary” that the legislation was rushed through Parliament just 10 days before its proposed start date and that some regulations that underpin the reforms have yet to be finalised.
Bodies of applause
Further ASIC guidance is expected over the course of 2012 and the regulator’s crucial guidance on codes of conduct for financial advisers is unlikely to arrive until early in 2013.
The Financial Planning Association (FPA) welcomed the minister’s urgency in supporting the measure to protect the term financial planner.
“While there is still detail to be worked through with Regulatory Guidance and not all of our recommended amendments were adopted, the FPA welcomes the passing of the reforms as it allows the industry to move forward and get on with implementing changes with greater certainty,” the FPA said in a statement.
“While we would prefer a longer transition period given the extent of these reforms, they do align FoFA with other regulatory changes for the industry such as MySuper and Tax Agent Services.”
While the FPA continues to oppose FoFA’s opt-in and additional fee-disclosure provisions for existing clients, it believes that the final shape of the legislation delivers a sensible outcome for Australia’s professional financial planners and their clients.
“We also welcome the minister’s urgency in supporting the measure to protect the term ‘financial planner’,” says FPA chief executive, Mark Rantall.
“The legislation to limit the use of this term to those with the right qualifications will ensure higher standards are set for financial planners and provide further confidence for Australians seeking financial advice from a trusted professional.”
Enough of the negative talk everyone. Let’s keep this positive. Pat, Anne, Peter – your comments about the FPA are postively brilliant. Keep up the great work. Your honest, transparent and fearless “way of being” is inspring. The truth hurts, but the public needs to hear it and know that not all financial planners are like those that have plagued our past.
There is this annoying advertisement to the left…that….is….weakening my strength…must stay positive…it reads “The Only Way to Secure a Bright Future is to invent it”…FPA…are they admitting that that a bright future is yet to be created at the FPA and it must be invented?
Well, I’ll have to agree with you FPA, you haven’t invented it and it’s quite pathetic that you’re asking members to create it.
I would recommend to any young adviser that wants a bright future to join the AIOFP or IFAAA, their future is much brighter because they’ve invented/created the way to put clients first. Seriously, it’s not rocket science…
Breaking News: Professional Body successfully negotiates with government over proposed legislation; non-members rant in comment boxes.
Breaking news: advisers licensed through product manufacturing institutions more likely to recommend owner’s products. Oh wait, not so breaking.
Surprise surprise Mr Johnston, the only thing you have to say is to have a shot at the FPA. Very constructive input into the debate
And Anne, Im guessing that when the FPA are successful in having professional financial planners recognised in law you will be happy to ride on the coat tails of the credibility that this will bring. Who is full of themselves???
Well your shots at Mr Johnston and Anne hardly constitutes constructive input into the debate either Julie.
I can’t see what it matters whether the term financial planner is protected; ‘accountant’ isn’t. As a professional association, the FPA is a bit like a union and meant to represent it’s members. I’ve always felt though that the large dealer groups and product manufacturers, who contribute the most money, also set the direction. It can hardly be called an association representing financial planner’s interests; more so institution’s interests.
Why has FOFA not addressed the nefarious volume rebates and shelf fees? Is it because the FPA argues against it at the behest of dealer groups and platforms?
Surprise surprise, the FPA are supporting the industry funds and Minister Shorten to bash the independents with discriminatory aspects of FOFA.
good on you mark Rantall. the correct qualifications should read FPA qualifications that the FPA have charged a huge amount of money for. It will make no difference to me or my clients what I call myself as long as I do the right thing by my clients. Totally full of yourself if you think the average person out there gives a toss about a title that is “enshrined ” in law.
Agreed – having been practising for about 15 years, during half of which I was a CFP (before canning it as it was an expensive waste of time), I have had, let me count, 1 prospective client ask if I was a CFP. Most people will have no idea what it means or who the FPA is. A colleague who has never been a member of the FPA was also asked 1 time, with the correct answer of ‘no, I am not’. The prospect is still a client after about 6 years.
What value does the FPA bring apart from catering towards institutionally owned advisers?
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