FOFA stampede could get uglier

The financial planning industry has been undertaking some intense lobbying in recent weeks in the hope of extracting some key amendments to the Government’s Future of Financial Advice (FOFA) legislation – but one of its key objectives must be to achieve a longer timetable for implementation.

As the roundtable published in this week’s edition of Money Management makes clear, the complexity of the changes being pursued by the Government are such that few companies operating in the financial planning industry are likely to be able to meet a 1 July, 2012 deadline.

What is more, the Government cannot suggest that the industry’s inability to meet the deadline is a result of tardiness. Rather, it is the product of the Government’s own approach to FOFA and the manner in which it has prolonged the exercise and created layers of uncertainty.

The very fact that the legislation is being introduced to the Parliament in a series of tranches is evidence of the degree to which companies are being asked to accommodate important legislative change without the benefit of being able to see a final picture.

If the Assistant Treasurer and Minister for Financial Services, Bill Shorten, cannot demonstrate to the key stakeholders the final shape of his legislation, then he cannot expect to impose on them the cost and energy of meeting an unrealistic timetable.

There is some evidence to suggest that the Government’s timetable is driven in part by its belief that it is confronting a narrow window of opportunity to introduce the FOFA legislation. With the polls consistently indicating a change of Government at the next federal election, a number of key figures within the industry superannuation funds have also indicated they are conscious of getting the FOFA changes in place in the belief that the Coalition would be reluctant to alter everything.

This was also something clearly evident in the attitudes of the roundtable participants, a number of whom indicated that if the Gillard Labor Government did not run its full term, contingency arrangements would need to be put in place.

With the number of Parliamentary sitting days for 2011 already running short and with the FOFA legislation having been directed to a Joint Parliamentary Committee, the minister has plenty of reasons to accommodate the concerns of the industry by extending the timetable for its introduction.

Sensibly, the industry should not be expected to commit to anything without being aware of the entire picture.