Confusion reigns over the timing of the introduction of the Government’s Adviser Charging Regime, a key plank in its Future of Financial Advice reform initiatives, which will require clients to opt in to an annual adviser fee renewal.
An information pack outlining the Government’s Future of Financial Advice initiatives details key reforms which the document says ‘… will apply from 1 July 2012.’ One of these key reforms is the introduction of the Adviser Charging regime.
Although this statement says adviser charging will apply from 1 July 2012, is this correct?
Financial Services Minister, Chris Bowen, issued a media release last week, where he refers to a transcript from an interview he conducted on the day of the announcement of the Future of Financial Advice reforms, in which he said:
“… sometimes you can sign your life away but later you realise that you just aren’t getting value for money anymore. That’s not the way it should be. So we will institute a system, so maybe after a few years, you have the option to renew that annually, to ensure that you are getting the value for money that you want.”
Within the context of the interview (click here for the full transcript) it is not clear whether Mr Bowen is refering to ‘maybe after a few years’ after the advice has been in place or ‘maybe after a few years’ after 1 July 2012 or ‘maybe after a few years’ from today.
Mr Bowen issued his statement last week in response to comments made by Shadow Financial Services Minister, Luke Hartsuyker, which criticised the Government over what it sees as backflips on elements of the Future of Financial Advice reforms.
However, Mr Hartsuyker’s media release appears not to be criticising the timing of the implementation of Adviser Charging, but rather the frequency of when this should occur. The Shadow Minister said that, as reported in print media:
“… discussions between the Minister and those in the industry have shown that the Labor Government is looking at a number of changes to the original proposals. This includes significantly extending the time intervals at which investors must opt in to percentage based fees paid from the manufacturer.”
So, what exactly is in contention? The timing of the implementation of Adviser Charging, or the intervals at which Adviser Charging should occur? Or both?
If confusion exists at this level, it would seem a difficult task to expect financial advisers to understand exactly what is going on.
Ongoing consultation between Government and the financial services industry will help determine how Adviser Charging will be rolled out, and advisers will reasonably expect to be included in the consultation process and have details clearly and unambiguously communicated to them.
The Industry Funds have taken over the agenda and control of the process. David Whitely sees a big personal star on his political CV to bring this home. So to think it will be grandfathered or extended is wishful thinking. The Industry Funds and the Banks will be extraordinary winners.
What client has ever complained about paying servicing commission? What client has ever complained about paying commission instead of up front fee for service. The only one’s who ever complained have been those involved in Storm, Westpoint etc. Nothing to do with Managed Funds. Only an extemely small percentage of investors and all after the fact, crying through their, greedy pockets. This is nothing but an agenda pushed by Media, Banks and Industry funds.
What’s wrong with freedom of choice?
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