The Government has responded to allegations that its proposed Future of Financial Advice amendments could be challenged in court by saying it will not speculate on hypothetical situations.
In one of a number of attacks on the proposed FoFA changes launched by Industry Super Australia (ISA), the lobby group said it had obtained legal advice that the advice industry could be open to ‘significant potential future litigation’ as a result of the reforms.
According to the ISA, who cited the advice of law firm Arnold Bloch Leibler, if the more significant amendments were implemented via the Government making regulations, they risk being declared “invalid” and “susceptible to challenge in the courts”. The Government has previously advised that, in order to speed up the reform process, it would deliver the changes in regulation form first, to be followed by legislative change.
ISA CEO, David Whitely, said: “The advice indicates that the Government’s chosen path for amending these consumer protection laws would be likely to increase uncertainty for the industry and increase the risk of litigation. This is contrary to the Government’s stated objectives for making the changes.”
Responding to the ISA’s criticism, Assistant Treasurer, Senator Arthur Sinodinos, said all Commonwealth legislation could be legally challenged and that the Government did not intend to speculate on hypothetical court challenges to the regulations.
“I encourage all stakeholders to provide input to the consultation process as submissions close this week,” said Senator Sinodinos.
…no amount of regulation can prevent another financial collapse
“The Abbott Government will continue to listen carefully to all views put forward and will consider the drafting of regulations and legislation if it does not reflect our policy intent.”
Mr Sinodinos also responded to speculation that the reforms could lead to another incident like the collapse of Storm Financial:
“Recent media coverage has also focused on the case of Storm Financial, but let’s be clear, no amount of regulation can prevent another financial collapse as you can never regulate away all risk,” he said.
“Neither our reforms nor the existing FoFA laws can prevent a possible future financial collapse.”
The Association of Financial Advisers and Financial Planning Association have also countered the arguments being put forward by groups like the ISA. Click here for the latest.
