The Association of Financial Advisers (AFA) will step up its push for a delayed start date to the federal government’s financial advice reforms to ensure consumers are not lost amid the changes.
Concerns have been growing over the piecemeal release of Financial Services and Superannuation Minister Bill Shorten’s Future of Financial Advice (FOFA) reforms, with advisers increasingly worried about meeting the requirements of deep legislative changes that have not yet been finalised.
According to draft laws before Parliament, the financial advice industry must comply with FOFA requirements from 1 July 2012.
AFA chief executive Richard Klipin said the association would push for a FOFA start date of one year from the date the final legislation was unveiled.
Klipin said a delayed start date would prevent poor implementation of the reforms and disadvantage to consumers.
“The last thing anyone would want is to have an unsuccessful implementation of FOFA; a really clunky implementation of FOFA that disadvantages consumers,” he told InvestorDaily.
“The danger is if it’s not handled effectively and well, people will be operating almost in a vacuum as systems come into play, new documents come into play, new client processes come into play.
“It’s more about the government understanding that this is not just a tick-and-flick piece of legislation; it is fundamental reform and change of the industry and they need to give people across the industry time to get set and time to get it right.”
He said the member body would involve all players in the political process, but would focus on specific quarters.
“Certainly, it’s the conversation directly with the government, in particular with the Minister and the Minister’s office, and Treasury, and it’s very definitely ASIC. They are the key touchpoints,” he said.
“Clearly, the opposition and the independents need to understand the size of the change and the impact that it will have, so all involved in the political process are key.
“It will come down to Treasury and then ASIC to implement across the industry, so that’s the tiering that we have to go through in terms of getting the understanding and making people aware of what’s really involved.”
Meanwhile, the FOFA legislation looks set to be delayed.
Shorten’s office has said it was aiming to have final legislation through Parliament early next year, however, the first tranche of the FOFA legislation has been referred to the Parliamentary Joint Committee for review.
The PJC has no deadline for completion of its assessment, but the government is hoping to have the review finished by the end of the year.
This would put the first part of FOFA on track to be finalised by February or March 2012.
The second tranche of FOFA has yet to be introduced in Parliament, making it unlikely a debate would be held over its contents before the end of the year.
“The policy debate and the political campaign we’ve been running – it’s game on,” Klipin said.
“Arguably, it needs to step up and has stepped up. We’ve now just seen the first tranche of legislation, and there are enough major concerns about it that advisers now have a message to take to their local MPs because we’ve now got the black and white proposals on the table.”
