Coalition Slams Government on FoFA Processes

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The Coalition has accused the Government of failing to properly assess the impact that its proposed Future of Financial Advice (FOFA) reforms will have on businesses and consumers.

Opposition Shadow Minister for Financial Services and Superannuation, Senator Mathias Cormann, condemned the Government for not having sufficient information  in its possession in order make considered decisions about key elements of the FoFA reform proposals.

This criticism follows a Senate Committee hearing this week that included questioning of the Office of Best Practice Regulation (OBPR) in relation to its assessment of the likely impact of the proposed FoFA reforms on business and consumers.

Responding to questioning by Senator Cormann, OBPR Executive Director, Jason McNamara, acknowledged his department did not have enough information about the impact on businesses and consumers and the cost benefit of key parts of FoFA for the Government to be able to make informed decisions.

Mr McNamara detailed six areas where the OBPR did not have sufficient information to determine their impact both on businesses and consumers:

  1. Renewal requirements for on-going financial advice fees to retail clients (opt-in)
  2. The treatment of paid commissions on insurance products within the superannuation and life insurance products outside of superannuation
  3. The treatment of soft dollar benefits
  4. Access to advice
  5. Replacement of the accountant’s exemption
  6. The carve out of simple products
… time, or lack of it, was an important factor contributing to the OBPR being unable to develop satisfactory Regulatory Impact Statements

The transcript of the exchange between Senator Cormann and Mr McNamara highlighted that time, or lack of it, was an important factor contributing to the OBPR being unable to develop satisfactory Regulatory Impact Statements in relation to these six elements.

Senator Corman remarked: “It is not good enough for Bill Shorten to just press ahead with changes like Opt-In and his ill considered and ever changing proposal to ban commissions on risk insurance inside superannuation.  He should not be allowed to press ahead with his vested interest agenda to make Australia the world leaders in financial advice red tape without going through proper process.”

The Senator also noted that the OBPR has never even been asked to assess the latest Government proposal to retrospectively impose additional annual fee disclosures requirements on financial advisers.

Senator Cormann said the least people should be able to expect is that the Government will comply with its own process requirements before pressing ahead with changes where the associated costs will ultimately be borne by consumers.  He has called on the Government to commission a proper RIS which complies with its own best practice regulation requirements.



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5 COMMENTS

  1. All financial advisors should acknowledge the excellent support we are getting from Senator Cormann. It is a great comfort to know that for once we have a politician who understands what our business is all about and is prepared to take on the purely socialist bias of a Bill Shorten and the union based Superannuation funds.

  2. Fair comment by Peter Hartnell. Most financial advisers feel they have already gone through a gruelling 15 round heavyweight bout firstly with Bowen (and hasn’t he gone on to better and better things)and now Shorten. Having had the living suitcase belted out of us its a mild relief that someone in Canberra is listening and prepared to stick his oar in for our industry. But are the real decision makers listening?

  3. It would be interesting to know how the contant Industry Super advertising on television is payed for. This advertising has gone on for a very long time with adds running on all the major channels. This must be showing up on a balance sheet, but where?

  4. It is great to have a Senator such as Mathias Cormann attacking Shorten for trying to implement such ill-conceived and draconian measures that are not going to stop another Storm occurring, will increase costs to both advisers and clients, will reduce even more people from obtaining financial planning advice, will cause many good planners to go out of business and will increase the money coming into union controlled financial business such as ISF.

    Having a someone in the Senate will at least ensure that the other parliamentarians are hearing that FOFA is unfair to everybody.

  5. I feel like Senator Cormann is the only politician trying to do the right thing in regards to FOFA.

    Bill Shorten wants to ban advisers receiving commissions on insurance, but allow Industry funds to receive commissions on this same insurance.

    I wonder where his loyalty lies? In doing the right thing, or lining his mates pockets…

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