Is time running out for FOFA and Bill Shorten?
It is now three months since the Government secured the passage of its Future of Financial Advice (FOFA) legislation through the House of Representatives and as part of the underlying deal committed to restricting the use of the terms ‘financial planner’ and ‘financial adviser’.
Apart from explaining the Government's position during parliamentary debate around the FOFA bills, the Minister for Financial Services and Superannuation, Bill Shorten, had up to the middle of last week said nothing further on the issue.
Given next week's end of the 2011/12 financial year will also represent the start of a 12 to 14-month countdown to the next federal election, the time available for Shorten to make good on his promise around legislating to enshrine the terms ‘financial planner’ and ‘financial adviser’ is running short.
While the past three years have been a period of great uncertainty for financial planners, the next two years are likely to prove even more critical as the FOFA regime becomes fully implemented and the nation moves to a federal election.
What is more, the ability of public servants working within the Treasury to deal with the issue would seem very limited in circumstances where they and personnel within the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority are still fleshing out the detail around both FOFA and the Government's Stronger Super legislative agenda.
Given all the controversy which attached to the passage of the FOFA bills, it would be a shame if at the time of the next federal election the financial planning industry had nothing tangible to show for the concessions which were extracted by the Government via its proxy – the Industry Super Network.
Just as the end of the financial year represents one of the milestones on the way to the next federal election, it also represents a pivotal time for a number of the organisations providing representation to the financial planning industry – the time when they seek to encourage members to renew their memberships by paying their annual subscriptions.
It says something about the policy uncertainty under which financial planners have operated that the 2012/13 financial year will be the first 12-month period in nearly four years which planners will enter having some certainty – albeit, no absolute finality – about the rules under which they will be expected to operate.
ASIC is still working on the intricacies of the regulatory framework around FOFA, but at least planners know they have 12 months to adjust to the new environment (including the two-year opt-in), irrespective of whether they are signatories to particular codes of conduct.
While the past three years have been a period of great uncertainty for financial planners, the next two years are likely to prove even more critical as the FOFA regime becomes fully implemented and the nation moves to a federal election.
Financial planners will need to look at 1 July 2012 as a time to examine the future and how their interests will best be served.
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