There are indications that the Financial Planning Association (FPA) and Industry Super Network (ISN) are working together to arrive at a compromise agreement on key elements of the proposed Future of Financial Advice (FoFA) reforms.
An industry source has confirmed to riskinfo the existence of a document in which a modified version of the contentious opt-in reform measure will be supported by the FPA, in return for guarantees relating to enshrining the term ‘financial planner’ into law and in return also for modifications to the Best Interest statute.
Part of the proposed compromise on opt-in includes the prospect that the requirement will only apply to new clients and that a class order relief would be enacted that would grant the adviser relief from complying with opt-in after four years, if they appropriately observe all its requirements during that time.
The proposal, however, intends that access to the class order relief on opt-in only be made available to advisers who meet minimum professional standards, although it is unclear what these standards will be.
The FPA ‘s CEO, Mark Rantall spoke to riskinfo this afternoon about the issue:
“There’s been lots of rumours. I’ve heard about the document but I haven’t seen it.
“We are talking to all the key stakeholders, of which there are many. But only one group has control over what is delivered and that is the Government,” he said.
We are doing whatever we need to do to shape the legislation to meet these aims
“Over the past few days, we have continued our discussions and negotiations with key stakeholders involved in shaping the legislation that will go before Parliament imminently.
“We have not wavered in our resolve to ensure that the legislation achieves positive outcomes for consumers while ensuring a sustainable future for financial planning businesses that provide advice.”
Mr Rantall added that what was important was that the legislation achieves the “right end game” to do the following:
Consumer benefits
- To help consumers know how to find a financial planner who is appropriately qualified, educated and works to high professional standards, and clearly separate these professionals from others who give advice
- To help consumers to easily understand what advice they’re getting, who they’re getting it from, how much they pay and how they will pay
Profession benefits
- To make the professional standards of financial planners are increased over the coming years
- To make sure that all who give advice put their clients’ interests first
“We are doing whatever we need to do to shape the legislation to meet these aims,” said Mr Rantall.
“The FPA position and recommendations for FoFA continue to remain the same.”
AFA CEO Richard Klipin said that while negotiations over the last few days had been fluid, he was not aware of any deals that had been made. Mr Klipin said he would be very surprised if there was any negotiating done by the ISN with a group (advisers) it had been maligning for ten years.
“FoFA is too important for side deals.” said Mr Klipin. “What we need is good policy for advisers and consumers.”
Senator Mathias Cormann said he would be very surprised if any such deal had been made.
“The FPA, the AFA and the Financial Services Council have all been very supportive of the 16 Coalition recommendations to improve FoFA. That includes our strong and unequivocal recommendation that opt-in be rescinded,” Senator Cormann said.
“FoFA in its current form is bad policy, which unnecessarily increases costs and red tape for both business and consumers.
“Opt-in is bad public policy, which is bad for financial planners and bad for consumers. It unnecessarily increases red tape and costs for both business and for consumers for very little additional consumer protection benefit. The Coalition remains firmly opposed to Labor’s push to force clients to re-sign contracts with their advisers on a regular basis.
“Out of 407 submissions to the original Ripoll inquiry only one – the Industry Super Network submission – called for the introduction of opt-in. It is part of a vested interest agenda pursued by the ISN. I would be very surprised if the FPA ever supported opt-in,” he said.
“I certainly urge all stakeholders to continue to stand up for good policy and to refuse getting drawn into dodgy deals to help out vested interests,” he added.
There is no telling how far they will go is there.
The whole aim of all of this is to give industry supper the largest book of business it can get.Then watch the privacy rules get changed to help the government take over the imformation available about employers who are paying.
That
is why FREE ENTERPRISE SUPER WAS ESTABLISHED—- WHO REMEMBERS THAT?.IT HAS HAD A FEW OWNERS SINCE and was a bit of a struggle at first but I still hold signed options to appear in the industrial court for employers. THAT IS HOW STRONGLY THEY FELT ABOUT BEING IN A UNION FUND WITH THE UNIONS ABILLITY TO OPEN THEIR BOOKS . ANYONE THINK THAT HAS CHANGED?Only the method has changed the idealism got a knock when John Howard formalised super in the 90’s taking it away from the industrial court and AMBIT CLAIMS.
But I remember driving around to see clients in the 78-9 period when Frank Creen was in parliment. He was ranting about the super of the day, and rightly so,cherry picker funds mostly.
He said to Fraser if you don’t do something about it we will. So appeared Paul Keating and the ambit claim as soon as they could put it together. I think one of the big bakeries was the first to fall.AND THE LIFE INDUSTRY NEW NOTHING COULD’NT EVEN PUT A USEFULL FUND TOGETHER FOR A FURTHER TEN YEARS.
DONT TRUST THIS ALLEDGED DEAL IT IS A CAT AMOUNG THE PIDGEON’S and we are the big Ps.
The fact is it is the life work for some of these guy’s and they are not about to let the party down! jg
I agree with Gillies. It’s about giving Industry super the biggest book by destroying competition in a carve up between the major institution and Union super funds. Money talks and money controls big business and this government. Imagine any other industry in the world being allowed to act as a cartel (ISN) let alone one that control this country’s biggest asset, its retirement nest egg. Where is the ACCC? We only saw a glimpse of where the future of the country is heading when ISN heads wrote to mining companies as shareholders to stop the mining tax advertising campaign. Imagine the power of ISN if they held 60% of BHP etc etc.The ability to muzzle dissent and direct business outcomes via not voting on bonuses etc. Imagine the power they would have over government. The Liberals would be lucky to take power once in every 20 years if they allow this Government to monopolise the wealth of this nation in the hands of unions. Am I the only one scared of so few, controlling so much? The MTAA super is a prime example of the dodgy practices that saw the unlucky investors who remained copp a 24% reduction in the value of their super because of its inability to revalue assets on a regular basis hoping that the market would come back. I know of advisers who switched client out of this fund so that those without advice copped the brunt of the revalue. It’s pure and simple Fraud!!!! This government wants to destroy businesses that employ local people and pay taxes in favour of a big business, centralised and not paying taxes.It scares the life out of me what is happening in this country.
Stick to your guns FPA and DO NOT deal with the ISN as we all know that opt in is bad policy and should not be accepted in any form.
Its the super for the PAST
This debate should be over – its simple, place every industry fund on each dealers APL and actually research the make up of the assets and they become immediate HIGH RISK SELLS – MTAA, Uni Super springs to mind. Just how is it that in 2009 listed Property trusts fell over 60% and yet, unlisted property via IPS (Industry property services owned and operated by union funds) provided a gain of 10% that flowed through to each and every sub asset class? Propping up balanced and core returns?
The buildings were the same – just when will those actual losses get passed through to members????
Have Chant west and the other “independent” houses bothered to look at the unlisted or “value when ever we like” industry funds? Have the actual returns paid to members been looked at?
In other words what the reality vs. the published? Is it true that once a request to rollover is processed by a union fund that Comrade gets no return for the up to 21 Day admin period?
With the unions losing members due to lack of relevance in the 21st Century, they have the gravy train of super contributing to the lobbying of industry funds & to General Secretary of the ACTU.
Das Vedanya Comrades! Vote Labour / Green the communist team.
If this story has any basis of fact then big money ( on both sides ) is back. While I am not a member of FPA, I am given to believe by some of its members that the big ( read BIG ) insurer fund managers/insurers no longer swing the lead at the FPA like they used to when fund manager execs sat on the FPA Board.
BUT, if the same fund managers now have some influence at the FPA via their fully owned member AFSLs, then this could explain this rumour.
Or are to take the FPA at face value and believe them that they are not negotiating with the ISN
If its not the FPA, then who?
A little history may provide the answer.
Back when the SGC was first being talked about at 3%, advisers,via the ALA, and the predecessor of the Financial Services Council ( ISFA ?) were publicly against the introduction of the SGC.
BUT, behind their backs 3 of the largest fund managers were negotiating with certain well known heavies from the union movement to get a piece of the investment action on a wholesale basis.
Can someone please tell me this is not happening again. That this rumour that ISN are negotiating with ” someone ” about opt-in on our behalf is not true. That those same self-interest groups who betrayed their advisers in the nineties are not at it again, supping with the devil.
As previosly noted, the ISN business model is to get more super funds in, on the cheap, by convincing a idealogical-driven government to restrain and restrict the retail fund managers greatest asset – small business advisers, all in the name of consumer protection, of course. Once they have size, as noted by Gillies and Doh, they will then swing the lead in investments into their pet directions.
Why not ask 3 or 4 of the big gorillas if they are in talks with ISN, negotiating the viability of our businesses away in return for a greater slice of the wholesale funds, particularly if the ISN funds are dragged kicking and acreaming into transperancy and regular valuation of property assets
John Doh,
So true. My Doh is on you! It is all about union wealth and power, in the geise of profit for members only. If it was profit for members only then why the need to advertise on TV. Why are they encouraging people to join industry super. Oh yeh, they don’t pay commissions. They just line Singo’s pockets with advertising costs that probably exceed what commissions may have been paid. But as we all know most of us charge fees.We may hear about commissions in 20 years time, even though they don’t exist.
I agree with John. The ISN have a lot of power. And of course the directors of the ISN’s dont take large directors fees? They do this for the good of there working class members. I remember a Bill Shorten at one time being a director of a ISN. I thought that the Director fees were pretty good, actually a lot more than my income for years work!
Great- if its not enough that the union movement is installed in Government in Canberra, my professional body is now going cap in hand to them so they can tell me how I should run my business. What business do the industry super funds have sticking their noses into how I manage my client relationships? The FPA should be meeting with them to show them how, in terms of transparency, liquidity, administration etc (even ASF payment facilities), to bring their funds up to scratch so that the planning industry could begin to consider their products when dealing with clients- actually scratch that idea- after all the cr*p they’ve been spreading, they’ll never get any support from me. Tell ’em to get nicked, FPA.
AFA all the way FPA sold out years ago. Who is still paying for membership to these Juda’s?
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