If the draft terms of reference are any guide, the Abbott Government has provided David Murray with plenty of scope to go deep when he leads the forthcoming Financial Systems Review.
And while it is understandable that the Financial Planning Association wants there to be some breathing space for the Future of Financial Advice (FOFA) changes to “germinate”, it would be wrong to remove financial advice from the scope of the inquiry. If superannuation is to be examined then so, too, must be the advice industry.
Indeed, it is to be hoped that the Financial Systems Review will achieve what FOFA and the former Government’s Stronger Super approach did not – an objective and holistic examination of the wealth sector encompassing the interrelationships between advice, retirement incomes and regulation.
The problem with the approach adopted by the former Labor Government was that neither FOFA nor Stronger Super could be said to have evolved out of a 360-degree view of the wealth sector.
FOFA was born out of the collapse of Storm Financial and was unduly influenced by the industry fund lobby. Stronger Super was born out of the Cooper Review, but failed to reflect many of its most important recommendations.
Further, the FPA is wrong to assume that the Financial Systems Review’s traversing of the advice sector will necessarily place undue further pressure on the industry.
Given that Murray and his review team will have the best part of 12 months to produce their final report, it will be at least another 18 months before their recommendations find their way into legislation.
In other words, FOFA will have had been trialed for nearly three years and it seems entirely likely that any move to introduce new legislation resulting from the Financial Systems Review will be subject to the usual industry consultations and discussions.
It has been more than a decade since the original Financial Systems Review conducted by Stan Wallis, and while it is arguable that the Australian financial system is not broken, it is certainly beginning to reflect the fact that the industry has evolved well beyond what it was at the turn of the new century.
The circuitry and, indeed, the underlying technology which drives the financial services industry has changed and it makes sense for Murray and his team to examine all the components and the protocols within which they are expected to work.