Why financial planning reform is on the political backburner
While there will be plenty of discussion around policy issues this year, the realities of the political cycle mean it will be well into 2011 before financial planners can expect to see any actual change.
Question: Will 2010 represent a year of radical legislative change for the financial planning industry?
Answer: Probably not.
While there will be plenty of discussion around policy issues this year, the realities of the political cycle mean it will be well into 2011 before financial planners can expect to see any actual change.
The Cooper Review into superannuation is still on foot and the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, has made it abundantly clear that the Government will not be acting in the absence of having all the facts and inquiry recommendations before it.
So those financial planners who have found the time to worry about such things should consider the following timetable:
- the Federal Budget will, as usual, be brought down in May;
- the Cooper Review is scheduled to deliver its final recommendations on June 30; and
- the Prime Minister, Kevin Rudd, is likely to feel the need to go to the polls sometime in the final quarter of the year.
Planners might then care to consider how long it takes for the Commonwealth’s legislative draftsmen to shape new laws and for governments to subject those laws to the normal consultative processes.
Thus, at best (or worst), financial planners might expect that the Federal Budget will contain some changes flowing from the recommendations of the Henry Tax Review, but they need have little fear that the Government will be willing to substantially alter the regulatory landscape any time before the first half of 2011.
Of course, as the events of the global financial crisis and the resultant bank guarantee have proved, governments can feel compelled to act radically in a crisis.
However, in the absence of another planner-specific disaster such as the collapse of Storm Financial, the Government is unlikely to see any merit in unduly asserting itself.
As they have for most of the past half-decade, planners can expect to be the bogeymen targets of the industry funds movement and to be the subject of negative assessments in the advertising campaigns mounted and financed by those funds.
However, history has already shown that in an environment of steadily improving markets and therefore steadily improving super returns, Australians do not care much about such argy bargy.
For all these reasons, planners should be hoping for 2010 to unfold as a year of continuing recovery and unremarkable events.
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