Yesterday finance minister Mathias Cormann announced that the two major parties had reached an agreement to progress a slightly amended version of the post-disallowance original FOFA legislation through regulations before the year’s end.
The agreement will see amendments to the FOFA grandfathering provisions in order to allow financial planners to switch licensees and retain grandfathered commission payments, following outcries from the financial services industry that the status quo would lead to restraints of trade.
The new regulations will also include a specific conflicted remuneration exemption for “training and education provisions”, slight amendments to stamping fee provisions and amendments to the “brokerage-related provisions of FOFA to extend the provisions to products traded on the ASX24”.
Speaking to InvestorDaily yesterday, shadow financial services minister Bernie Ripoll said Labor’s willingness to negotiate on the aforementioned elements of FOFA reflects its previous commitment to make amendments.
“Our position remains as it always has pre-election, there were a number of minor amendments that we wanted to make and we continue to have that view,” Mr Ripoll said.
“Some of the issues – such as grandfathering – Labor agrees with and will facilitate that change. We want to ensure there is no jeopardy for advisers in terms of the work they do.”
Mr Ripoll also took aim at the government, explaining these re-instated regulations could have been implemented some time ago.
“The government chose a complicated and difficult path to getting its changes through i.e. through ministerial edict or regulations, which was a disallowable instrument,” he said.
“Our view is that where we can agree we ought to move as quickly as possible.
“The reality is that we could have done this six months ago had we had a willing partner – the crash through, all or nothing approach is no way to treat the financial services sector.”
Industry associations representing financial services providers welcomed the move, with the FSC, AFA and FPA issuing statements to explain the decision would have competition benefits for the market.
Meanwhile, BT Financial Group chief executive Brad Cooper said the agreement takes the debate outside the realm of party politics and that it is now the industry’s turn to raise standards.
“We are glad there is a bipartisan approach to some of the issues the industry was facing in making the original FOFA legislation workable,” Mr Cooper said.
“While some concerns remain, it is now clearly up to the industry to work through the practicalities of implementing the legislation and minimising the cost impact and disruption to clients.
“Financial advice needs to remain affordable and accessible to all Australians and we have no hesitation in committing to continuing to work with all sides of politics to achieve this in any future policy announcements.”
