Financial Services Minister Bill Shorten (pictured) has told financial planners they haven’t managed to convince him the introduction of a two-year opt-in requirement would “beat their businesses to a pulp”.
Addressing financial planners at an Association of Financial Advisers (AFA) luncheon in Sydney, Shorten acknowledged he had seen evidence suggesting the introduction of opt-in would lead to a significant cost increases to the provision of advice, but said he did not believe the figures.
Treasury was convinced, however, that an annual opt-in requirement would be too onerous, hence the new two-year proposal, the minister said.
“I do not accept the proposition that asking clients to renew mandates every two years is beating financial planners to a pulp; I don’t get that and I haven’t been persuaded by any of your advocates on that point,” Shorten said.
“I believe that a large number of financial planning practices seek mandates from their customers more frequently than on a two-year basis,” he added.
Instead, the minister invited financial planners and their associations to work with Treasury to develop the scope of the opt-in requirement.
He did understand concerns of those looking to sell their practices, with opt-in uncertainty preventing them from guaranteeing four or five times annual income.
He responded in a similar fashion to planners’ concerns about the commissions ban on risk products within super, expressing scepticism that its introduction would lead to further underinsurance, and referred to figures which suggested there had been an uptake in insurance via super.
“What I don’t accept is that financial planning should not upgrade its performance in terms of eliminating conflicted remuneration structures; I don’t accept the proposition that compulsory superannuation should be taxed by all those financial service providers on the way through to someone’s retirement,” Shorten added.
However, the AFA said it did not change its views on the two most controversial Future of Financial Advice proposals, with its political strategist Kerry Chikarovski warning the Government that planners would continue to work with the Opposition to block the reforms package.
The financial planning industry would most probably see the draft legislation in August, according to Shorten.
