Hayne’s findings important but not without flaw

8 March 2019

The 2019 Federal Election is shaping as being one of Australia’s most antagonistic and financial planners and others in the financial services industry should brace themselves for a tough time as both sides of politics seek to prove themselves more virtuous than the other in terms of both the calling of the Royal Commission and how they will act on its findings.

That is why De Gori was also right in suggesting things might have been better if the Royal Commission had run another six months if only to keep it off the election agenda.

But there exist a number of other very good reasons why the major political parties should tread carefully around the Royal Commission as an issue. Quite simply, while the Commissioner, Kenneth Hayne, identified some significant issues and made some astute recommendations, he was not entirely infallible.

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As good as the lawyers and other Royal Commission support staff proved to be, it is clear that they did not always appreciate the nuances associated with a legislative framework which evolved through different political regimes and through policy pivot points such as the Future of Financial Advice (FoFA) and the Life Insurance Framework (LIF) and which in many respects remains a work in progress

It is in these circumstances that the Association of Financial Advisers (AFA) policy director, Phil Anderson has made some valid points about what he sees as having been gaps in the comprehension of counsel assisting, while industry veteran and former dealer group chief executive, Paul Harding-Davis, has provided a reminder of the realities contained in a Corporations Act which, reflecting the antecedents of the industry, connects advice to product. 

In circumstances where both sides of politics have rushed to largely endorse the findings of the Royal Commission and in the case of the current Treasurer, Josh Frydenberg, committed to almost unquestioning implementation it is little wonder that the likes of the De Gori, Anderson and Harding-Davis feel more than a little concerned.

The findings and recommendations of Royal Commissions are rarely, if ever, implemented in full and there is a good reason they are not. Quite simply, implementation can be a complex task requiring considered examination of existing norms and the avoidance of unintended consequences.

Then, too, the Royal Commission has referred a number of issues to the regulators for possible prosecution and any sensible adviser to Government will know the embarrassment which will follow if legislative change is put in place but the courts find in favour of the defence rather than the prosecution.

Kenneth Hayne is a highly experienced and distinguished jurist who has done a fine job within the terms of reference and the time-frame handed to him but his findings should not be regarded as infallible and I am sure he does not regard them as being so.

Politicians should not seek to leverage the Royal Commission for political gain but should, rather, give the recommendations their considered attention outside of the tumult of acrimonious electioneering.

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