Key FOFA 'concession' in question
The Federal Opposition has signalled it remains to be convinced about either introducing or supporting legislation which would restrict the use of the terms 'financial planner' or 'financial adviser'.
While the Minister for Financial Services and Superannuation, Bill Shorten, undertook to legislate to restrict use of the terms as part of the negotiations to secure the passage of the Future of Financial Advice (FOFA) bills, the Opposition spokesman on financial services, Senator Mathias Cormann, has warned the financial services industry that such a move is not a fait accompli.
The Financial Planning Association (FPA) has listed "agreement to table legislation to enshrine in law the term 'financial planner'" as one of the key concessions won as part of the FOFA negotiations.
However, Cormann has told Money Management he is yet to be convinced of the need for such a course of action.
"We are yet to be persuaded that increasing regulation along those lines is warranted," he said.
Further, the Opposition spokesman pointed out that legislating to enshrine the terms 'financial planner' and 'financial adviser' would sit at odds with the status of other designations common in the financial services industry.
"Bear in mind that the term 'accountant' is not currently enshrined in legislation," Cormann said.
However, he made clear that his reluctance to endorse the Government's undertaking on legislatively enshrining the term 'financial planner' in no way diminished his support for the financial planning industry becoming a profession.
However, he said his view was that professionalism in the financial services industry would be better pursued via the setting of higher educational standards objectively and independently administered by educational institutions.
He said that this regime could then be allied to professional standards imposed by relevant bodies like the FPA, the Self-Managed Super Fund Professionals' Association, and the Association of Financial Advisers themselves.
Cormann's position on legislating to enshrine the terms 'financial planner' and 'financial adviser' means that unless legislation is both introduced to the Parliament and passed before the next federal election, the issue is likely to face tough scrutiny by a Coalition government.
Cormann did not stipulate how the Coalition would view such a legislative provision in the event that it had already been made law.
However, Cormann has declared that a Coalition government would legislate to rescind the opt-in provisions of the FOFA legislation, although it is not known the degree to which such a legislative change would then impact the obligations contained within any industry codes of conduct previously approved by the Australian Securities and Investments Commission.
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