Uncertainty besets financial services as Government rushes reforms
Rushed financial services reforms such as FOFA and Stronger Super are exacting a heavy toll on financial planners and superannuation funds, writes Mike Taylor.
Money Management’s sister publication Super Review last week held a roundtable of senior superannuation industry executives at which a strong consensus emerged that the pace with which the Government was seeking to deliver on its legislative agenda was causing serious problems.
From a superannuation industry perspective, the Government is seeking to meet implementation timeframes based on 2013, when the industry believes 2014 would be more appropriate.
From a financial planning perspective, there are many who would argue that the 1 July 2013, Future of Financial Advice (FOFA) implementation date is also problematic.
As this publication has stated many times before, the underlying problem for the financial services industry is that there are too many legislative and regulatory loose ends and unknowns.
The result is that administrators and platform operators are largely flying blind and making key decisions on significant expenditure on the basis of guesswork.
The level of that guesswork is exacerbated by the fact that not only is the Government pursuing its FOFA and Stronger Super agendas, it has also tweaked and altered the tax settings around superannuation and other investments at every Budget since it came to office.
Indeed, there now appears to be a feeling in the financial services industry that the only certainty with respect to the taxation and regulatory environment is change.
This is hardly something which can be viewed as assisting in building confidence among Australian investors, consumers and superannuation fund members.
Even those who are close to the industry have been left uncertain.
There was an admission at last week’s Super Review roundtable that the state of Australian politics and the pace of the Government’s legislative agenda meant that chief executives were keeping one eye on the policies being pursued by the Australian Labor Party and the other on the policy currently being outlined by the Federal Opposition.
What this indicated was that the uncertainty which has plagued the financial services industry for most of the past half-decade will remain a factor for at least the next 18 months to two years – the period which will see the implementation of the FOFA and Stronger Super changes as well as a Federal Election.
When the Australian Labor Party regained power in 2007 the then Prime Minister, Kevin Rudd, indicated that his Government would not be in the business of radically altering the super settings.
As the major parties move more formally into election mode, it would be helpful if both sides committed to engendering a more certain environment.
The challenges currently confronting the financial services industry are considerable: they are only made harder by tinkering policy-makers and hasty politicians.
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