Financial planners should strongly welcome the delayed implementation of Future of Financial Advice because shortly after its introduction will be the next Federal Election.
Allowing for the current Federal Parliamentary schedule, it seems entirely probable that by the time this editorial is published our readers will know the final shape of the legislation which will shape the financial planning industry for at least the next two years.
They will know whether the independents in the House of Representatives joined with the Federal Opposition to push through amendments to the two-year opt-in, annual fee disclosure and the nature of the client best interests criteria.
However, financial planners should not have allowed themselves to become too optimistic.
An analysis conducted by an ardent watcher of events in the Federal Parliament last week told Money Management that independents Tony Windsor and Rob Oakeshott had voted to support the Government on no fewer than 86 per cent of occasions during the life of the current Parliament.
That suggests the odds of achieving significant amendments are long indeed.
However the good news from last week was that the Minister for Financial Services, Bill Shorten, has taken the sensible option of extending the implementation of FOFA by 12 months.
Shorten said the reforms would commence from 1 July this year, but compliance would be voluntary until the changes were formally implemented on 1 July, 2013.
In truth, the Government had little option but to grant the 12-month implementation period in circumstances where the processes around the drafting and implementation of the FOFA bills had become so bogged down that a 2012 date had become impractical.
Financial planners should strongly welcome the delayed implementation because it suggests that no matter what the legislation looks like when it emerges from the House of Representatives and then the Senate, they will have had time to get their houses in order.
Further, if the legislation is not to be formally imposed until 1 July, 2013, then it will be only a few short months before the next Federal Election and the Government’s policy position and performance can be judged at the ballot box.
Of course, financial planning is never likely to be a big issue in the context of a full-blown Federal Election, but it represents one of the few areas in which the policy positions of the two major parties have been fully spelled out.
The Opposition has made its position abundantly clear in the context of the amendments it has moved in the House of Representatives.
It has flagged its intentions with respect to superannuation and, particularly, the role of industry super funds in the context of union influence, and their perceived monopoly with respect to default funds under modern awards.
The financial planning industry has campaigned hard over FOFA. It may need to continue that campaign through to the next Federal Election.
