FOFA flaws laid bare by PJC
It became apparent during the Parliamentary Joint Committee hearings held to review the Future of Financial Advice (FOFA) bills that the legislation requires significant amendment, writes Mike Taylor.
One thing became very clear during last week's public hearings of the Parliamentary Joint Committee (PJC) reviewing the Future of Financial Advice (FOFA) bills – the legislation requires significant amendment to ensure it meets its objectives and avoids any unintended consequences.
The big question, of course, is whether the parliamentarians who make up the joint committee are sufficiently capable of putting aside partisan party political interests to deliver the necessary amendments.
In truth, most pressure will be on the Labor Party members of the committee, because many of the necessary amendments bring into question the competence of one of their most ambitious colleagues and factional players – the Minister for Employment and Workplace Relations and Minister for Financial Services and Superannuation, Bill Shorten.
Then too, there is the level of influence some trade union officials and industry superannuation fund trustees can exert on members of the Federal Parliamentary Labor Party.
However, with a number of the current Labor committee members having participated in delivering the bipartisan report of the PJC which gave rise to the FOFA changes, they should have no problem in supporting amendments designed to ensure the legislation achieves its original objectives.
In many respects, legislation introduced by a minister during his/her time overseeing a portfolio stands as both a legacy and a measure of their competence to hold higher office.
With that being the case, any reading of the submissions to the PJC and the transcripts of last week's public hearings suggests Bill Shorten has an issue with consistency, clarity and detail.
Just as the Financial Services Reform Act represented the single most important policy change impacting the financial services industry in the first decade of the new millennium, the FOFA regime represents the most important change impacting at least the next two decades.
It follows that it is imperative that the Government gets the balance right.
What became clear last week is that sufficient evidence has been delivered to the PJC to confirm the necessary balance has not been achieved and that some significant amendments are necessary to avoid not only distortions but also unintended consequences.
It is to be hoped that policy common sense will prevail among the members of the PJC and that a bipartisan set of recommendations can be developed capable of translating FOFA into viable long-term change for the financial services industry.
If the minister then fails to accept those recommendations and amendments, then he must accept history’s ultimate judgement of his legacy.
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