Treasury disowns key FOFA research
The Federal Treasury has denied it has endorsed the validity of research conducted by Rice Warner on behalf of Industry Super Australia (ISA) and which now stands at the heart of moves to convince the Senate to disallow the Government’s regulatory changes to the Future of Financial Advice (FOFA) legislation.
Money Management has obtained e-mails sent by senior Treasury officials in response to queries raised by the Association of Financial Advisers (AFA) which make clear that the Department of Treasury did not endorse the validity of the Rice Warner research.
That research claimed that the FOFA changes related to Grandfathering would cost consumers an additional $2.8 billion over the next 14 years.
Asked to confirm the existence of the e-mails, AFA chief executive, Brad Fox, confirmed that his organisation had written to both the Treasury and to Rice Warner seeking to clarify the status of the research because it believed it was based on an inaccurate premise.
Fox said the AFA had also been concerned at claims that the research had been accepted as valid by the Treasury and that this was how it was being portrayed to cross-bench and minor party senators.
He said what while the ISA had used the Rice Warner research claim that an adviser could move an existing client to a new product and retain commissions, this was fundamentally wrong because this was not allowed under either the existing FOFA laws or the Government’s changes.
Fox said the AFA had been in the process of seeking further clarification from Rice Warner, but that the actuarial consultancy had told his organisation that those queries should be referred to the ISA.
“We asked the ISA those questions a couple of weeks ago and we’re still yet to get a reply,” he said.
A check of Hansard transcripts by Money Management confirms that while Treasury officials have cited the existence of Rice Warner research, they have never suggested that it has been tested or endorsed by the Treasury.
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