Much attention has been directed towards the manner in which a Parliamentary Joint Committee will handle the Government's Future of Financial Advice legislation but, as Mike Taylor reports, the likelihood of a bipartisan approach is very remote.
Financial planners should not become too optimistic about the capacity for the Parliamentary Joint Committee (PJC) on financial services delivering any outcomes capable of altering the shape of the Government’s Future of Financial Advice (FOFA) legislation.
While it is true that the PJC chaired by Labor backbencher Bernie Ripoll managed nearly two years ago to deliver the original bipartisan report that gave rise to the Government's FOFA agenda, the likelihood of bipartisanship or any meaningful change to the first tranche of the FOFA is remote.
The Government and particularly the Assistant Treasurer and Minister for Financial Services, Bill Shorten, have too much at stake to allow Labor members of the PJC to support any of the changes which might be pursued by members of the Coalition for and on behalf of the financial planning industry.
Indeed, the most likely outcome from the PJC will be two reports – one generated by Government members and likely supported by the Greens and another, dissenting analysis, generated by members of the Coalition Liberal and National parties.
The benefit that will flow to the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) is that reference of the FOFA legislation to the PJC gives them an opportunity to restate their concerns about issues such as the two-year ‘opt-in’ and the almost retrospective imposition of comprehensive product disclosure requirements.
The two organisations have also lost no time in ramping up the lobbying campaign they began earlier in the year aimed at convincing parliamentarians in all states – but particularly the independents – of the flaws in the Government's approach.
As was the case earlier in the year, the most-visited independent has proved to be Port Macquarie-based parliamentarian Rob Oakeshott, largely based on the belief that he earlier this year signaled he held some reservations about the benefits of opt-in.
Similarly, a good deal of lobbying has been directed towards Tasmanian independent Andrew Wilkie.
However it is axiomatic of the delicate balance in the House of Representatives and the relationship which exists between the key independents and the Government that Oakeshott’s attitude towards ‘opt-in’ and other elements of the FOFA legislation in November, 2011 is somewhat changed from that which prevailed in June.
While no one is suggesting that financial planners should not continue lobbying Oakeshott, Wilkie and other key parliamentarians, the industry's cynics suggest that the independents may yet seek to use their support or opposition to FOFA as a bargaining chip for their own agendas. Wilkie in particular is seen as a single-issue politician.
However the degree to which the lobbying efforts of the financial planning industry have made their mark was indicated by Bernie Ripoll when he addressed the Association of Financial Advisers’ annual conference on the Gold Coast last month.
Ripoll remarked about the manner in which his Parliamentary colleagues had complained about the number of visits they had received from financial planners and the issues which had been raised.
While the PJC chairman indicated that he was entirely supportive of the Government's FOFA approach, he acknowledged that the level of lobbying undertaken by financial planners on the issue had made some of his colleagues uncomfortable.
Notwithstanding the likelihood that the PJC will fall well short of adopting a bipartisan position on the FOFA bill, the FPA last week relaunched the do-it-yourself lobbying kit with which it armed members earlier this year.
FPA chief executive Mark Rantall said that whatever the outcome, he believed the reference of the FOFA bill to the PJC represented an important opportunity for the industry to restate its points.
This was a view echoed by AFA chief Richard Klipin, who said his organisation and its members had never ceased making representations with respect to its concerns about the FOFA legislation.
While the PJC appears unlikely to adopt a bipartisan position with respect to the FOFA legislation, it will give financial planners a clear signal as to how the bill is likely to be treated in the House of Representatives.
If the only members of the PJC recommending amendments to the legislation are sitting on the Opposition benches, then the Government will know that its bill is likely to be passed intact.
If, however, a majority of members on the PJC support the position adopted by the Coalition, amendments become a certainty.
What must be remembered, however, is that the legislation to be considered by the PJC is only the first tranche, with at least two further packages expected in coming months.
