The Acting Assistant Treasurer’s decision to put the Future of Financial Advice (FoFA) amendment regulations on hold has reignited the war of words between industry stakeholders.
Last week, Senator Mathias Cormann, announced he would not introduce regulations to amend FoFA until he had consulted with industry stakeholders (see: Cormann Calls Halt to FoFA Regulations).
The Association of Financial Advisers (AFA) said the delay was disappointing but that it hoped the pause would return the debate to a facts-based discussion.
“We now have a window of opportunity for the reintroduction of facts and integrity into the FoFA amendments debate,” said AFA CEO, Brad Fox.
“It is surprising that sensible and pragmatic amendments have generated such vigorous debate and broad exposure. It is clear that the debate is now based upon what people think of the erroneous claims, rather than a detailed and informed analysis of the specific amendments.
“Now is the time to question why and how this has happened and to consider the vested interests at play,” he said.
We now have a window of opportunity for the reintroduction of facts
Mr Fox argued that Australians had been exposed to a relentless campaign of misinformation, exaggeration and scaremongering. He said it was in the consumer interest to test these claims.
“The systematic destruction of consumer confidence in financial advice is highly damaging to the financial future of Australians and Australia. It’s time for the fairy tales to end and for all parties to act in the genuine best interests of consumers.”
Industry Super Australia (ISA) CEO, David Whitely, said the organisation welcomed the willingness of Senator Cormann to re-look at the detail.
“It would be in the interests of everyone to try and reach a consensus on what is workable and places the interests of consumers at the forefront.
“Ultimately consumers will be served by vigorous competition among product providers on the features and merits of their products, not what financial incentives are offered to advisers for their recommendation,” Mr Whitely said.
He said the ISA would work with the Government, the finance sector and senior and consumer groups to try and find a consensus that delivered a strong public policy outcome.
“The status of the advice industry and its aspirations are inextricably linked to community trust and confidence in it,” he added.
Adding his voice to the discussion, Connect Financial Service Brokers’ CEO, Paul Tynan, said the legislation was far too important to rush and additional comment and scrutiny would be beneficial for all.
…many are putting their own interests far ahead of the industry and consumer
“It’s an unfortunate reality that the overabundance of special interest groups lobbying so intensely in the support of their specific sector, business or association is not helping the situation and regrettably many are putting their own interests far ahead of the industry and consumer,” said Mr Tynan.
However, Mr Tynan did lament the fact that advisers were being forced to endure another period of uncertainty.
“The need to move forward has never been so important or paramount. I can only repeat that it is the financial advisers that continue to be the main casualties – especially those that have been unable to buy and sell businesses because of the grandfathering issue. This too is having an effect on consumer confidence and the reputation of the sector as a whole,” he said.
FOFA was not needed by clients at large but was an invention of the Labor Party and people such as Cooper and Ripoll who had never been real personal Financial Advisers. FOFA was designed to sabotage “competitors ” of the ISA.
Whitely is concerned with flogging a product which serves to provide extra income to selected unionists and ex Labor Politicians plus the “Liberal” the Hon Peter Collins as Chairman of ISA, and gives the Labor Party voting power at share holders meetings and the more the better according to Weaven in the past.
Financial Advisers provide advice for clearly declared costs to investors whether it be commission or a fee for service. Additionally advisors use investment products as part of their available menu, but not always as there are plenty of subjects and client needs covered which do not involve the sale of a product, e.g. estate planning, and budgeting.
The big lie advertised by ISA that their PRODUCT can be compared with the SERVICES provided by financial advisers needs to be stopped. Invariably, in my 25 years of experience the products I have chosen to provide clients are far superior to the very basic products from ISA. My investment product menu comprises true to label asset allocations, risk adjusted products to suit clients’ personal needs, and real insurance products. Unlike Whitely’s people, I have no connection with developers, do not use funds or products where the end investment cannot be clearly defined, art work from hippies, high risk investments in poorly engineered infrastructure, etc.
The ISA needs to be closed down since they are not providing a comprehensive service to investors, and are simply there to wage a war to get people to invest in their feeble products for the personal gains of a few unionists and for the political power of the Labor Party.
FOFA needs to be abandoned entirely!!!!
Well said Brad Fox.
As much as it kills me, the ISA ran a ( so far ) successful PR campaign against the FOFA changes. Every friendly journo was briefed, while both our professional bodies relaxed thinking the fat lady had sung with Abbotts election.
Like all pollies, the ISA spun the truth in some areas, and discounted in others. The Government got a break when the Senator from NSW HAD to step down, givng Cormann the chance to cool things off.
The problem was Sidodinis gave the ISA more ammunition to blur and mislead the debate by giving in to the banks on the general advice proposition, without any public debate – the changes just magically appeared on the list, and no one saw them coming.. That allowed the ISA to argue general advice sales by bank tellers meant My Super products being sold over the counter for commission. Shock, horror !
If Cormann took good advice ( and he won’t get it from the ISA friendly Treasury ) he would eliminate General Advice entirely, including the rubbish risk products now flogged by the direct sellers on TV
As they say, that would be a courageous decision
And banking pigs might fly !
I wonder when this will all end if at all ? I was amused to read David Whitely’s comment on how some in the industry are putting their own interests ahead of the industry. I think every Financial Adviser is well aware of their FUDUCIARY DUTY by now if not they must have been in a coma for the past 4 years however once this is established and understood why would you not want to ensure the industry you have helped develope provides you with a system that is workable anf financially viable. Education is fine and we all do more than necessary in most cases but without a workable ststem for the people at the “Coal face” you would be the most educated person on the “dole cue” The people who receive $300,000 or more a year that head up these antagonistic industry funds have no idea what it takes to ensure our business runs smoothly, that we can pay ourselves each week [if we are lucky] not to mention staff and assistants. After 35 years in the industry and countless useless amendments and alterations you would think they could come to a workable solution by now ? These changes are not as recent as we are led to believe it all started in the mid 90’s with Customer advice records {CAR} and has been chopped and changed a dozen times since then.
The enevitable end to this without agreeance is less advisors in the industry more “crap” policies being “flogged” via the media and a complete blowout in underinsurance as there will be no one left to give good advice as it is too expensive and time consuming just to keep your license and business “afloat”
Where to next i wonder ??
You apparently dont like my comments am i correct ?
The interesting thing now is that Whitely is making himself a target for the Royal Commission into the Unions, along with the Treasury guys who blatantly support the ISA, will be looking to be named by the Royal Commission and terminated from the Public Service. These Treasury folk now need to be very very careful indeed, as any limitation on advice will see them involved in answer to the Royal Commissioner in respect why? So it will be up to the Royal Commissioner to look at the Treasury files as to what they proposed and who they listened to with their views of FOFA. If it was the ISA then it will be goodbye time.
Whitely knows the enormous trustee fees (in the millions per trustee) paid to union trustees is unsustainable. He also knows that the ISA cash flows are now under threat from My Super which is really the virus that will destroy the ISA.
FOFA was their last attempt at stopping the water going over the wall. It has failed. Their campaign to control the Federal Treasury staff view of FOFA will lead the Royal Commission to the Treasury door. Again if you are a Treasury Officer dealing with FOFA I would be very very very careful about removing anything that stopped advice being given, and being seen to be given. If your pro-ISA in your comments on the files then its all over for you. We now live in a different world of disclosure of the facts, not the ALP Spin. Remember the Federal Court just gave a Union a $1.25m fine to remind the union who is making the rules. All that will happen in this case is that the Treasury will just get a note to send us the files from the Royal Commission.
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