The Coalition intends to reverse opt-in and the proposed ban on super risk commissions if it regains power and has vowed to fight the current proposed legislation to ensure that those elements of FoFA it considers to be bad policy do not pass through the House of Representatives.
Speaking at an AFA breakfast in Sydney last week, Senator Mathias Cormann, Shadow Minister for Financial Services and Superannuation, said the Coalition did not support the Government’s opt-in proposal, or the banning of risk commissions inside superannuation.
“Let me say upfront, the coalition supports changes to the regulatory framework that make the provision of financial advice more transparent and which improve choices for consumers and which make financial advice more competitive. What we will not support are changes that increase red tape, increase cost and reduce choice for consumers for no public benefit,” he said.
“We will not be supporting, for example, a requirement forcing consumers to re-sign contracts with their advisers on a regular basis,” said Senator Cormann, adding:
“Essentially these are private contractual agreements between advisers and their clients, and it’s not up to the government to tell us what we can and can’t do in that regard.”
Bill Shorten is intent on making Australia the world champions in red tape
“It feels as though the government doesn’t trust consumers to think about what is in their own best interest,” he said. “The government is effectively saying to the consumer: ‘We’ve got to protect you from yourselves.”
Senator Cormann said the ban on risk commissions inside superannuation would create another distortion in the market. He argued: “There is now an inherent incentive for people to be encouraged to take out risk insurance outside super, where they may not necessarily be able to pay for it.”
“The only reason that I’ve heard from Bill Shorten in relation to the banning of risk insurance commissions inside super is that people who structure their risk insurance inside super get a tax advantage. So what? Is this about increasing taxes or is this about pursuing reform that is supposedly there to prevent future collapses like Storm, Westpoint and Trio? We know it’s not the latter.”
The Senator accused Minister Shorten of “… looking after the vested interest of his friends in the industry super movement,” a comment that drew a very positive response from the audience attending the breakfast.
… tell me one jurisdiction anywhere in the world where the government forces consumers to resign contracts with their advisers on a regular basis
Senator Cormann continued, “Bill Shorten is intent on making Australia the world champions in red tape when it comes to financial advice,” the Shadow Minister said. “You tell me one jurisdiction anywhere in the world where the government forces consumers to resign contracts with their advisers on a regular basis. It is government intervention to a level unheard of anywhere in the western world.”
The Shadow Minister said the Coalition would do whatever it could to convince the independents to vote against those elements of FoFA that are not in the clients best interest.
“Don’t think that FoFA as it currently stands is an inevitability. It isn’t. There is still a debate to be had in the parliament, and there is opportunity for us to improve what is currently a bad piece of legislation.
“Independents are that, independent. If you explain why something is bad for consumers and small business, and why it won’t actually fix the things it is designed to fix then you’ll find it will make people think. And all we need is one.”
Senator Cormann pledged that should the legislation be passed, and the Coalition is re-elected, it would repeal elements of the Labor policy.
“If the Government, against all of our best endeavours, manages to get the reforms through Parliament, obviously that is one of the things that we would look at dealing with when we get into Government,” he said.
Finally, someone who knows what they’re doing and aren’t just out to score political points!
Pity they didn’t look into these things properly before they try to implement things they no nothing about and that will see more Australians underinsured and not receiving advice.
Here, Here. Liberal all the way
If you ever wondered who was backing True Free Enterprise, Free Trade consumer chioce and competetive markets let me tell you it is The Liberal Party.
What Senator Cormann has stated at this function is the only proof you need to tell you that a Vote for the Liberal Party at the next Election is a vote to protect our clients interests, the interests of our clients children (Our future Clients) and in short our profession that assits so many Australian to achieve their Financial Goals and Security for their families.
Finally someone has been listening not only to advisers but to consumers as well. Whilst the labor government continues to line the pockets of union owned industry funds.
Strikes me that insurance under super is so stupid that it is there to give a token win once reforms are debated?
Opt in will destroy legitimate businesses who legitimately rely on ongoing income streams without which will be forced to levy higher upfront fees! Opt in will create an Opt out…. clients need protection from themselves in the sense that they don’t realize the need for ongoing advice and service!!!!
The client has the right to choose how the advice is to be paid and if it is disclosed as a fee or commission with a dollar value what is the problem? If the client cannot pay any other way they will no longer have the advice which is suppose to be available to them by choice. Reducing the clients ability to obtain tax benefits is also not in the interest of the client.
As far as I know bank planners rarely contact their clients once they have signed them up. At the very least making them contact clients to see if they are satisfied with the level of service (or lack of more likely) will deliver better long term outcomes for clients
I think the industry needs to accept that FoFA is going to happen. Adjust and restructure your businesses complaining isn’t going to change anything. The Coalition is in opposition for the next 2.5 years and once the Greens have the balance of power in the senate FoFA will be passed. Even if the Coalition is returned to government in 2013 which is more than likely, it’s doubtful they will repeal legislation that has been in force for the best part of two years. Any attempts to do so would be blocked by the Labor party and the Greens in the Senate who will still hold the balance of power. As they say you can’t unscramble an egg.
Cunningly,this Govt and its Union front bench members have been backing their colleagues in Industry funds strident vilification of “commissions” as unethical and almost a criminal way of earning a living.It tarred the Financial Advisory occupation as crooked and of no value.They set the Agenda for this fiasco.Commissions are a part of everyday consumer life in many occupations.What makes them corrupt?Thank you Matthias,there was nothing wrong with the old system.
Advice is supposed to be independent. Anyway you look at it commissions imply a conflict of interest, whether it is real or perceived. If anyone can explain how it doesn’t imply a conflict of interest I am all ears. There is no point blaming the Government it’s just plain lazy, doesn’t matter whether it is Liberal or ALP. Deal with reality that is all that can be done. The real blame for needing something like FoFA is squarely with the advisers from Storm et al.
I really have to disagree with Matt’s comments. FoFA does very little to address the wrongs of a tiny minority of planners. Last time I checked the Storm fiasco had nothing at all to do with insurance either inside or outside of super and how that even came into the equation is somewhat mysterious to me. Clients can still be ripped off under these new “reforms” by Storm – like sharks because they do nothing to address inflated up front fees and cookie cutter solutions that appeal to people’s greed (and ultimately in many cases, ignorance/stupidity). I am also not sure how a “conflict of interest” is by definition a bad thing. Not many houses would sell if real estate agents didn’t have a conflict of interest to sell the house for you; not many electrical goods would move off the shelves at Harvey Norman and not many people would enjoy relaxing holidays planned and coordinated by “conflicted” travel agents. And few other industries where commission is part of the service are obligated to disclose it in such arduous detail as financial planners.
Congratulations Matt if you are able to have a client base all wealthy enough to pay your fees out of pocket. The simple reality is that many many people don’t and so therefore will be deprived of good advice under your model.
A conflict of interest is a bad thing, simple as that. I am not sure how you could even defend it? If you recommend products that you may receive something in return for how is that not a conflict of interest. Real Estate agents have a terrible reputation for that very reason! Comparing sales roles in real estate and retailing to Financial Advising is ludicrous and irresponsible, giving financial advice is a lot more important than selling TV’s or holidays.
Why do we cop all this and other rubbish by the government under the name of “REFORM” – The just want to change things to suit themeselves and their mates whit whom the have made deals for votes, add more taxes and call it reform!
Why are we not told how much the industry funds get?
How can they afford to advertise on prime-time TV?
What services are they actually supplying to their members?
What incentives to union bosses get?
Do workers have opt-in opt-out choices about paying their union fees?
Let’s be real, nobody can work for nothing.
What ever happened to free enterprise? This is more like green communism and dictatorship combined.
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