FOFA as nothing to a Royal Commission
The chief executive of Industry Super Australia (formerly the Industry Super Network), David Whiteley, is nothing if not consistent.
Thus, no one should be surprised by his response to the release by the Government of an options-stage Regulatory Impact Statement of its Future of Financial Advice (FOFA) changes.
Whiteley asserted in that response that the changes might see a return of conflicted remuneration and an erosion of client best interest. Not surprisingly, his claims were promptly dismissed and disparaged by financial planners.
While in the context of polemic consistency Whiteley’s statements are understandable, they continue to reflect the flawed perceptions that can go with viewing the financial planning industry through the prism of the interests of the superannuation industry.
Whiteley’s claims ignore the financial planning industry’s broad acceptance of the core content of the FOFA legislation and the manner in which both the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) have acted on their own initiative to foster professional and ethical practice amongst their members.
Both the FPA and the AFA have worked to develop codes of conduct which have at their heart client best interests, and both organisations long ago embraced the encouragement of non-conflicted remuneration structures.
Therefore, while Whiteley and others within the ISA may express concern about the Abbott Government’s amendments and changes to the FOFA legislation, the reality is that five years of debate and legislative process have already resulted in the fundamental changes which most parties thought were justified.
Further, many of the changes announced by the Government, such as the removal of opt-in and the interpretation of grandfathering, represent a winding back of an agenda prosecuted by the ISA when it arguably had the ear of the former Minister for Financial Services and now leader of the Opposition, Bill Shorten.
For its part, the ISA should be looking to ensure that the industry funds’ own backyard is tidy in circumstances where events appear to be conspiring to ensure that not only super fund governance is put under the spotlight but also the relationships which exist between industry funds and trade unions.
The Prime Minister, Tony Abbott, last week canvassed the need for a Royal Commission to examine allegations of corruption within the trade union movement and, by definition, any examination of the activities of trade union officials must ultimately traverse their involvements with industry superannuation funds.
It is in the nature of the trustee board structure of major industry superannuation funds that at least half the positions are filled by union officials or people appointed by a union. In some instances, it has been possible to match names controversially reported in the media with those sitting on superannuation fund boards. Thankfully, the number of cross-matches has so far been relatively few.
There have also been instances where investments undertaken by some superannuation funds have been seen to further political and industrial agendas – with questionable outcomes for the members of those funds.
With issues such as these looming on the horizon, trying to refight FOFA battles might be seen as a waste of resources.
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