Financial services loses its voice
Recent federal ministerial rhetoric suggests the financial services industry has few friends in high places and difficulty in finding its voice, Mike Taylor writes.
The Federal Government continues to oppose holding a royal commission into the banking and financial services industries but, increasingly, its ministers have been adopting the rhetoric of the major bank critics.
As the Coalition moves closer to the mid-point of its second term in Government, the comments emanating from the likes of the Minister for Revenue and Financial Services, Kelly O’Dwyer, with respect to the banks, financial planners and superannuation funds bear little resemblance to those which were being uttered when the Abbott Government first gained office in 2013.
In 2013 the position of the Abbott Government was that it would wind back the worst elements of the Future of Financial Advice (FOFA) changes overseen by now-Opposition leader, Bill Shorten, that it would seek to impose key governance changes on the industry superannuation funds and that it would be addressing default funds under modern awards.
In 2017, there is no longer any discussion on the part of the Government about winding back the worst elements of FOFA, there has been little real progress in changing the governance arrangements applying to industry superannuation funds and the political arithmetic in the House of Representatives and the Senate makes changing default fund arrangements highly problematic.
In the meantime, O’Dwyer, the Prime Minister, Malcolm Turnbull and the Treasurer, Scott Morrison have demonstrated an increasing willingness to reference past shortcomings in the financial services industry such as planner misbehaviour at the Commonwealth Bank, NAB and Macquarie together with commission arrangements for life/risk advisers and claims-handling problems within CommInsure to justify their policy positions.
The most recent instance of this was last week when O’Dwyer cited events at Commonwealth Financial Planning and the treatment of whistleblower, Jeff Morris, to illustrate the Government’s desire to pursue statutory protections for whistleblowers.
To a degree, the Government’s use of the Budget to impose a levy on the major banks and Macquarie was based upon its pragmatic but arguably cynical assessment that there would be no discernible back-lash to such a move. The same pragmatism/cynicism was then exercised by the economically beleaguered Weatherill Government in South Australia.
Indeed, there are some in the banking industry who are asking why the Federal Government has said little or nothing about the Weatherill Government’s proposed imposition of a state tax on the banks when such a move has implications for the underpinnings of the goods and services tax (GST).
The bottom line appears to be that the Government no longer sees any point in unnecessarily defending significant elements of the financial services industry in circumstances where it could not summon the numbers to roll back FOFA and where the same seems likely to apply to its pursuit of governance changes to superannuation funds and key changes to default fund arrangements.
All the available polling suggests there are no votes to be won and quite possibly there are votes to be lost in defending the financial services industry and politicians have been acting and speaking accordingly.
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