Few people in the Australian financial services industry evidenced any regret that the Liberal/National Party Coalition Government was returned to Government at the 18 May Federal Election, in circumstances where many had specifically campaigned against the policies of the Australian Labor Party (ALP).
As was made clear by the Association of Financial Advisers (AFA) in the days following the election result, a number of the financial services representative bodies had formed their own coalition to oppose key elements of ALP policy but, most particularly, the removal of refundable franking credits.
As the AFA stated: “The weekend election by the Coalition removes the threat for clients posed by the ALP policies on banning cash refunds for excess franking credits, banning negative gearing on the purchase of existing properties, a reduction in the capital gains tax discount and a range of changes to superannuation.
“The AFA was firmly opposed to the ban on cash refunds for excess franking credits and we worked closely with a range of other associations such as the SMSF Association, the Stockbrokers and Financial Advisers Association, Australian Shareholders Association and National Seniors Australia as part of an alliance to bring attention to the impact of this policy on a range of people, however, particularly those retirees who were just above the age pension thresholds.”
In other words, there was unanimity of purpose demonstrated by a significant cohort of the industry in opposing Labor policy and, post-election, we have seen further signs of unanimity of purpose with the AFA and the Financial Planning Association (FPA) confirming that they have formed a taskforce to deal with the future of life/risk commissions in a post-Life Insurance Framework (LIF) world.
It might also be noted that the AFA, FPA and the SMSF Association are amongst those which have combined to contemplate the formation of code monitoring body under the Financial Adviser Standards and Ethics Authority (FASEA) regime.
Given all of this, it is not a significant leap to conceive of a single lobbying voice evolving to represent to Government the industry’s concerns on key policy issues such as the future of life/risk commissions and, indeed, the workings of the FASEA regime.
The inability of the financial planning industry to consistently speak with a single voice over the past 20 years has arguably cost financial planners dearly when it is weighed against the lobbying successes of groups such as the industry funds and, one might argue, the policy influencers within the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
It seems that at least a part of the motivation for the FPA and AFA to speak with one voice on life/risk commissions was the obvious success of a united mortgage broking industry in seeking to argue the value of that industry’s commissions-based remuneration arrangements. It is a lesson which was obvious and should have been learned much earlier.
Anyone in the financial planning industry who imagines that the re-election of the Coalition Government will make their lives easier is deluding themselves. The same challenges which existed before the 18 May election remain – the future of LIF, the timetable for phasing out grandfathered commissions, the rollout of the FASEA regime, and the chest-beating aggression of the regulators, just to name a few.
And, on top of this, planners will have to come to terms with the changing commercial environment which will come with the retreat of the banks.
It is against this background that planners must remember that disunity is death.