It would, of course, not be expected that every measure offered by Financial Services and Superannuation Minister Bill Shorten would be swallowed whole, however, a surprise to come out of the reforms is how the industry’s contentious attitude towards them has become a force on its own.
Opposition to Shorten’s opt-in proposal is not new. Neither is the disdain felt towards the government’s ban on risk commissions inside superannuation.
The latest opposition comes from allies of ex-Association of Financial Advisers national president and financial adviser Joe Nowak.
An unnamed advice principal contacted IFA to show their support for Nowak’s comments calling on Shorten to reverse a number of FOFA reforms.
“While anyone who does not want advice will clearly now not be paying for it, the imposition of these additional, unnecessary measures will only serve to increase the cost of doing business for financial advisory practices,” the principal said.
“Given that the vast majority of planners are experiencing the most financially challenging period for many years, they will not be able to afford clients the luxury of absorbing the additional cost of the implementation of opt-in provisions to their business practices and will have no choice but to pass these new costs on to clients.
“It is bad enough that government intervention can increase costs within an industry at the stroke of a pen.”
The principal said when the additional costs come with no commensurate benefit, it makes you wonder what went wrong in the consultative process prior to the framing of the legislation.
“As unpalatable as the opt-in provisions may be, the decision to ban commission on insurance within super is worse,” they said.
“If legislated, this measure will create a scenario under which an adviser is faced with a moral dilemma as to whether to recommend cover within super that is in the client’s best interests, but for which he cannot receive commission, or write the cover outside of super where, while he may then receive commission, the client loses out on the cash-flow and taxation advantages of the alternative strategy.”
Late last month, Nowak contacted ASIC and political heavyweights to express his concerns over elements of FOFA.
In letters to Shorten, ASIC chair Greg Medcraft and opposition finance spokesman Joe Hockey, Nowak called for the reversal of FOFA.
The principal of course raises many good points. Though what is interesting about his views and those expressed by others within the industry is what an impressive common voice Australia’s financial services sector has finally found.
Over the past 24 months, there has been much finger pointing from external market segments over Australia’s financial planning and funds management sector, however, in the space of two months, the level of agreement across the industry is resoundingly clear.
If nothing else, this is indeed a positive step for the industry.
