The Assistant Treasurer, Bill Shorten, faces the prospect of some serious horse-trading in both houses of Parliament to get the financial advice 'opt in' legislation passed, writes Mike Taylor.
When a financial planner decided to launch an online petition opposing the proposed annual ‘opt in’ arrangements flowing from the Future of Financial Advice (FOFA) changes it was assumed by many that it would attract overwhelming support from the nation’s financial planners.
However, while the petition has attracted plenty of support, it has also served to highlight the existence of some deep divisions in the financial planning industry, very similar to those that have been identified as existing between new fee-for-service planners and their older counterparts who, if they have adopted fee-for-service, still boast a steady stream of income from trails.
At a time when officials within the Department of Treasury are known to be actively working on the draft legislation and when the Assistant Treasurer, Bill Shorten, is seeking to establish a politically viable policy position, the existence of these differences of opinion are likely to prove crucial to the regulatory environment planners are ultimately asked to accept.
At the crux of the differences between planners on opt in is whether the resulting administrative burden will be manageable.
A number of planners have suggested that provided they see their clients at least once a year, it should not be a problem, while others have suggested that dealing with clients can sometimes be like herding cats.
What planners already know, however, is that the Government has been placed under pressure by the industry superannuation funds to impose an annual opt in, while organisations such as the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) have tended to push for three-yearly opt in arrangements.
Unless the financial planning industry can produce a united front on precisely where it stands on the question of opt in, there is a danger the first draft of the FOFA legislation will contain a one-year default around which it may prove very difficult to negotiate change.
At the same time, the FPA made clear last week that it would be extending its efforts concerning the FOFA reforms beyond simply negotiating with Treasury officials and lobbying the Minister by having planners take their concerns to their local members of Parliament.
The so-called ‘member meet your local member’ packs would appear to represent a sound strategy when dealing with a minority government reliant on the independents in the House of Representatives and the independents and minority parties in the Senate.
The reality confronting Shorten is that no matter how hard he is pressed by some of the industry superannuation funds, the Government will not be able to pass legislation without some significant horse-trading in both houses of Parliament.
He will also be conscious of the fact that the Federal Opposition has its own agenda.
