FOFA battlelines unchanged

No one, least of all the Federal Parliamentary Labor Party and Industry Super Australia (ISA), should be surprised that the Minister for Finance and Acting Assistant Treasurer, Senator Mathias Cormann, intends to impose many of the Abbott Government’s changes to Future of Financial Advice (FOFA) by way of regulation. 

Both the Shadow Treasurer, Chris Bowen and ISA chief executive, David Whiteley, know very well that while those elements of the FOFA changes requiring legislative amendment will have to endure a tortured passage through the Parliament, those imposed by way of regulation will be implemented both quickly and efficiently. 

In the end, the Abbott Government will be seen to have delivered on most of its promised changes to FOFA within 10 months of having come to Government and, arguably, those changes will have succeeded in delivering a more balanced and workable package closely aligned to the bipartisan position developed out of the Parliamentary Joint Committee (Ripoll) inquiry. 

Bipartisanship with respect to Government policy for the financial planning industry has been an extremely rare commodity and it was regrettable that the influence of a section of the industry superannuation fund movement saw the former Labor Government develop a legislative package which moved well beyond the good sense which was exhibited in the Ripoll recommendations. 

Cormann’s decision to implement most of the Government’s changes via regulation has also been vindicated by ISA’s continued belligerence towards the Government’s changes as evidenced by Whiteley’s call for the Australian Securities and Investments Commission (ASIC) to urgently investigate the extent of “orphan commissions” capable of swelling the coffers of the major banks as a result of grandfathering. 

What was clear from the ISA statement was that it remained deeply opposed to the Cormann’s FOFA changes and seemed likely to continue to lobby the Federal Opposition and the minor parties to resist those elements requiring legislation. 

Cormann, of course, flagged very clearly that he understood the motivations of the ISA and other opponents of his FOFA changes, stating on national radio that the former Government had been “egged on” by “a segment in the financial services market that had a vested commercial interest in Labor making it more difficult for their competitors to provide services to people across Australia.”  

He said that it was in these circumstances that it was in the national interest and the public interest for the Abbott Government to “rebalance” that outcome. 

Cormann may see his regulatory and legislative changes as having “rebalanced” the FOFA outcome, but the reality which must be accepted by the financial services industry is that a significant section of the industry funds movement will remain resistant. 

It may be some considerable time before the Australian  financial services industry finds itself capable of speaking with one voice.