No quick fix to grandfathering issue
There will be no quick fix to the grandfathering issue and the movement of planners between licensees because any possible post-election scenario could take several months, according to the Financial Planning Association (FPA) chief executive officer Mark Rantall.
Rantall met with the Assistant Treasurer and Minister Assisting for Financial Services and Superannuation, David Bradbury, on 30 July, when they discussed possible solutions to the problem surrounding grandfathering which had emerged from the additional guidelines published by the Australian Securities and Investments Commission (ASIC) in June.
The issue stems from the possibility that planners who choose to change licensees would lose grandfathering privileges for existing clients, leaving them in limbo.
Rantall said the FPA was confident the issue would be dealt with, but it might not be in a way that was to advisers' satisfaction and it might take several months.
"He [Bradbury] is aware of the issue, the Treasury is aware of the issue, but the meeting was in the week before the election was called, at which time the Government goes into caretaker mode and no changes can be made to regulation," Rantall said.
"When the new Government comes to power, there will be a time where the ministry has to be determined, portfolios allocated and respective ministers will be busy settling in."
If the Coalition won at the September election, the industry would likely be dealing with Shadow Minister for Financial Services Mathias Cormann — but there was a possibility he would receive a different portfolio, Rantall said.
"If he isn't our relevant minister, we will have to deal with whoever gets the financial services portfolio," he said. "That means bringing them up to speed with relevant issues."
New regulations would need to be drafted by Treasury officials and signed off by the relevant minister.
"I don't think there's a quick fix to this problem - we could be looking at a number of months," Rantall added.
The Association of Financial Advisers (AFA) had already warned its members to adopt a cautious approach to changing licensees, while the FPA is urging its membership to seek individual advice if they wish to do so before the industry and the Government come up with a solution.
"Be aware of the risks surrounding this particular matter," Rantall said.
"We strongly advise to planners seek individual advice; make haste slowly and proceed with caution because you may or may not be captured by what is currently a very grey area."
The FPA is calling on the incumbent Government - regardless of which party comes to power - to deal with issues surrounding grandfathering as soon as possible.
"It is causing a great deal of uncertainty and concern amongst our membership," Rantall added.
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