Are FOFA and Stronger Super here to stay?
While the Opposition Spokesman on Financial Services, Senator Mathias Cormann, has signalled an intention to roll back elements of FOFA and Stronger Super, financial planners should accept that the substance of these bills will remain in place whether or not there is a change in Government at the next election.
Assuming a change of Government occurs at the next Federal Election, the Coalition is likely to be kept reasonably busy amending or repealing some of the financial services legislation introduced during the tenure of the current Minister for Financial Services, Bill Shorten.
In the past 18 months, the Opposition spokesman on Financial Services, Senator Mathias Cormann, has sometimes specifically committed a future Coalition Government to amending Government legislation while, at other times, he has generally signaled the pursuit of a different legislative path.
Cormann has specifically outlined the elements of the Future of Financial Advice (FOFA) legislation a new Coalition Government would change as being:
- removal of opt-in;
- simplification and streamlining of additional annual fee disclosure requirements;
- improving the best interests duty;
- providing certainty around provision and availability of scalable advice; and
- refining the ban on commission on risk insurance inside super.
Where the Government’s approach to Stronger Super and default funds under modern awards is concerned, the Opposition front-bencher has been less specific, simply pointing to the Government’s alleged failings and promising a Coalition Government would look to address the issue.
On this basis, financial planners should accept that 90 per cent of the FOFA bills will remain intact, and that it would be wrong to drag their feet in terms of meeting the broad legislative requirements.
They should accept that while a future Coalition Government will seek to make good on Cormann’s promises with respect to the FOFA bills, the underlying substance of the legislation will remain in place, including the impacts on volume rebates.
While the Opposition Spokesman on Financial Services, Senator Mathias Cormann, has signalled rolling back elements of FOFA and Stronger Super, financial planners should accept that the substance of these bills will remain intact.
However, the picture with respect to what a Coalition Government might or might not do relating to superannuation is far less clear, but those running industry superannuation funds may care to reflect on Cormann’s expressed distaste for the current regime, not least that applying to default funds under modern awards.
While the current Labor Government and minister Shorten may be strong supporters of the industrial relations linkages and trustee board structures which have been a tradition of industry funds, Cormann is certainly not.
Nor has he been an admirer of the manner in which the Industry Super Network sought to impose its views on the FOFA legislation.
Thus, while the challenge for financial planners over the next three years may be bedding down most of FOFA, the challenge for industry superannuation funds may be in dealing with a Government committed to having super funds adhere to the same standards of governance as publicly-listed companies.
With an election due within the next 12 months, the political pendulum appears closer to swinging back the other way.
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