The federal government’s Future of Financial Advice (FOFA) reforms have watered down this year’s federal budget for Australia’s financial services industry, though despite this, many believe the changes do not do enough for consumers.
Association of Financial Advisers (AFA) chief executive Richard Klipin labelled Treasurer Wayne Swan’s “tough love” budget as being “more like a six out of 10”, and leaving Australia without clear leadership and direction.
“I think there is a lot in that [the budget] is around addressing problems of the past out of the GFC (global financial crisis) where the focus is on trying to reduce the deficit and trying to [get] into a surplus,” Klipin said.
“I think FOFA has had a significant impact in what is or what isn’t in the budget. But the strategic imperative of confidence and leadership from the federal government is what is required in all sectors of the economy, including financial services.”
He said like the government’s delivery of FOFA and now with the budget announcement, Australia’s financial services industry and advice profession was now without a strategic plan.
On a positive note, he said the AFA was pleased the issue around the excess benefit tax had been addressed, and that from an insurance perspective that the government recognised the serious “requirements and the realities of life” in terms of mental health.
FPA chief executive Mark Rantall said the budget was a lost opportunity for middle to high-income earners.
“What we can glean is that a breach of concessional contribution caps up to $10,000, the tax payer can request that these excess contributions can be refunded to them and whilst we welcome that, it hasn’t done anything to address the issue of non-concessional contribution tax breaching where those breaches have been inadvertent and the potential tax penalty of 93 per cent,” Rantall said.
He said the potential penalty was punitive and probably excessive, given unintended consequences.
Financial Services Council chief executive John Brogden said the budget delivered some positives for superannuation.
“Probably the best thing is that there aren’t too many rule changes for super. Oddly enough, one thing we like is not having too many changes to superannuation,” Brogden said.
Association of Superannuation Funds of Australia chief executive Pauline Vamos welcomed the additional funding for the regulators to implement Stronger Super.
