2015 - New minister, new debates

Another year, another Parliamentary inquiry into the financial planning industry.

It is sadly axiomatic of the circumstances which have confronted the financial planning industry over the past half-decade that, as it enters 2015, the industry finds itself dealing with the Senate Economics Committee Inquiry into the implications of financial advice reforms, more generally known as the Scrutiny of Financial Advice inquiry.

To understand from whence this most recent Senate committee inquiry has come and where it is headed it is only necessary to know that that the chairman is upwardly mobile Labor Senator and former NSW Australian Labor Party apparatchik, Senator Sam Dastyari, the man who successfully orchestrated the disallowance of the Government's Future of Financial Advice (FOFA) regulations.

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It also says much about this latest Parliamentary committee inquiry that the submissions of at least three of the major banking groups are arguing that the FOFA changes be given time to work before any moves are made to embark on further legislative change.

In truth, the Scrutiny of Financial Advice exercise must be seen as a victory lap for those who successfully thwarted the Government's 2014 efforts to alter the FOFA legislation consistent with the promises it made in the run-up to the last Federal Election.

However, and in a very real sense, the inquiry must also be seen as sending a clear signal that the Government is unlikely to be able to initiative very much of its FOFA change agenda before the next Federal Election, due in 2016.

Given the Government's obvious challenges with respect to securing passage of significant elements of its 2014 Budget, the financial planning industry should pragmatically accept that while the FOFA changes are not entirely off the Government's agenda, they are certainly no longer a priority issue.

Notwithstanding the reality of any FOFA changes being placed "on hold" for the foreseeable future, 2014 delivered at least some reasonable outcomes for the financial planning industry, with perhaps the most significant being the recommendations of the Parliamentary Joint Committee on Corporations and Financial Services Inquiry into proposals to lift the professional, ethical and education standards in the financial services industry.

The recommendations of that committee, if translated into Government policy and then legislation, would fulfil many of the agendas of the Financial Planning Association (FPA) and Association of Financial Advisers, with respect to educational standards, the adviser register and the need to be a member of an appropriate professional association.

It is arguable that the PJC's recommendations, if implemented, could deliver a default form of enshrinement of the term "financial planner/adviser".

Putting aside the flow through of events from 2014, 2015 will also be significant for the financial services industry because it now has a new responsible minister in Assistant Treasurer, Josh Frydenberg, who has been identified as one of the Government's rising stars.

While the media was quick to suggest that Frydenberg's communication skills would be useful in the Government's budget sales efforts, the financial services industry will have discerned that the new Assistant Treasurer has already identified default funds under modern awards and super fund governance issues as areas for concern.

While FOFA may not of itself be in the political spotlight this year, the industry has plenty of other policy objectives to pursue.

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