Financial planning changes not a fait accompli

The financial planning industry entered 2010 facing uncertainty. It will close out the year with little having been satisfactorily resolved.

The industry’s year opened with the Ripoll Review findings, the completed but still secret Henry Tax Review and the machinations perpetrated by the former Australian Securities and Investments Commission (ASIC) deputy chairman, Jeremy Cooper, around his review of superannuation.

What does the industry have at the end of the year? The yet to be implemented Future of Financial Advice (FOFA) reforms which evolved from the Ripoll Review; a piecemeal approach to the recommendations contained in the Henry Tax Review; and the far from certain implementation of the recommendations of the Cooper Review.

The industry has not even been granted political certainty. Rather, in the wake of the September election, it has been handed the vagaries of a hung Parliament and a minority Labor Government that has no alternative but to be highly selective in deciding which pieces of policy it ultimately chooses to pursue.

The industry also has a new minister in the form of Assistant Treasurer and Minister for Financial Services and Superannuation Bill Shorten, whose earliest forays into his portfolio have seen him endorse the FOFA reforms and specific elements of the Cooper Review — SuperStream and MySuper — as Government policy.

However, the bottom line with respect to the Minister and all of the new policies is that there remain no certainties.

Nothing has been translated into legislation and nothing has been navigated through the Parliament. Much political horse-trading remains to be done and the Coalition has been keeping its powder dry.

It is in these circumstances that organisations such as the Financial Services Council, the Financial Planning Association and the Association of Financial Advisers would be wrong to view the FOFA reforms or the Cooper Review recommendations as a fait accompli.

It does not matter that the public servants representing the Department of Treasury have suggested to recent conferences that certain elements of policy are immutable.

They are, after all, simply bureaucrats. The ultimate shape of any legislation will be dependent on the mood of the Parliament.

In a hung Parliament there are no certainties and there is every sign that as the opposition parties develop their own policy positions and bring those to the debate, the Government will find itself needing to accommodate amendments.

Then too, there is the reality that Shorten has time-tabled important parts of his policy implementation for dates which fall after the current term of the Parliament — something which may dictate the changes never happen at all.

Many uncertainties confront the financial planning industry as it enters 2011, meaning it must continue advocating strongly on its own behalf.

This is the final edition of Money Management for 2010. We wish all our readers a safe and happy Christmas and a prosperous 2011.