The decision by the Minister for Finance Mathias Cormann to halt the progress of the Future of Financial Advice (FOFA) amendments through Federal Parliament has been well received but effectively locks in the status quo for advisers.
Cormann made the announcement to Federal Parliament yesterday afternoon, stating that he had decided to pause the implementation of regulations amending FOFA following last week’s referral of the legislative changes to the Senate Economics Committee.
The Federal Government stated earlier this year it would amend FOFA via legislation and regulation with the latter aimed at making initial changes that would be confirmed later by legislation.
However the referral of the legislation and the temporary pause called by Cormann effectively halts any further movement on FOFA, according to Financial Planning Association (FPA) policy and government relations general manager Dante De Gori, and leaves planners as they were prior to 20 December when the amendments were announced.
De Gori said while the Senate Economics Committee was due to report back by 16 June on the FOFA amendments legislation, regulations that made changes possible in the interim were due to be introduced into Federal Parliament this week.
He said the removal of the amendments put FOFA completely on hold for the present and they would not be presented again to Federal Parliament until late May due to a six-week break in parliamentary sittings.
According to De Gori, it was likely the Federal Government would use this time to receive submissions and conduct hearings at the Senate Economics Committee, and to decide if it should pursue the amendments as they stand through the current Senate or negotiate with a new Senate in July.
Cormann stated the Federal Government was still committed to “implementing the improvements to FOFA laws that we took to the last election as soon as possible”.
“These election commitments are reflected in the legislation currently before the House of Representatives, which will continue through the normal parliamentary process.”
Cormann stated the pause was to “enable the Government to consult in good faith with all relevant stakeholders on the FOFA regulations” and was “committed to the retention of the Best Interest Duty and that we do not intend to reintroduce conflicted remuneration or sales commissions for financial advisers”.
The pause in proceedings was welcomed by Industry Super Australia chief executive David Whiteley, who stated that a return to consensus was needed by both the public and industry.
“Gaining industry consensus on the regulation of financial advice will ultimately boost consumer confidence both in the financial advice sector and the superannuation sector.”
FPA chief executive Mark Rantall also welcomed the halt, stating that FPA supported the original intent of the FOFA reforms and would continue to promote the line between product and advice in further discussions with the Government.
