The rapid consolidation seen in the financial advice space since Future of Financial Advice (FOFA) regulations have been in train may not be entirely unintended, according to Shadow Assistant Treasurer and Opposition spokesman on Financial Services, Senator Mathias Cormann.
"I suspect the Government likes more concentration in dealing with fewer, bigger players," he said, speaking at a doorstop interview at the Association of Financial Advisers Sydney roadshow yesterday.
The grab for distribution in the wake of FOFA reforms has seen Commonwealth Bank purchase Count Financial, IOOF buy DKN, Snowball merge with Shadforth and recently IOOF agree to terms with Plan B, among others.
Cormann said it was in the public interest to have a diverse competitive marketplace and slammed the Government for pushing ahead with the reforms without conducting a regulatory impact statement.
"We know that the introduction of FOFA will cost $700 million to implement and $375 million per annum in additional compliance costs moving forward. And we know out of the Government's own explanatory memorandum that the Government expects about 6,800 advisers to lose their jobs as a result of FOFA," he said.
"We just think that is reckless and it shows the Government was never interested in good policy outcomes – they were always driven by an ideological agenda targeting small business financial advisers," Cormann said.
Earlier, he had reiterated his intention to "fix the bad elements of FOFA", including repealing opt-in requirements, fixing best interests duty requirements and clarifying scaled advice provisions.
Asked if the process of consolidation was reversible, Cormann said the Coalition is committed to cutting red tape and removing unnecessary regulation from the system.
"In doing so, not only do we hope to identify $1 billion worth of savings for business per annum moving forward, but we hope it provides the framework within which competition can thrive," he said.
"Ultimately, it is in the public interest to have the most efficient, the most transparent and the most competitive financial services system possible, where the Government doesn't give one segment of the market a leg-up against other segments of the market where different business models and different businesses compete with each other on the basis of a value proposition that is transparently put before consumers," Cormann said.
He had also earlier reiterated his opposition to the "anti-competitive, closed-shop" arrangements by which default super awards are selected, adding that all funds offering MySuper products should be eligible as default funds.
