Two weeks ago the Minister for Financial Services Joe Hockey released a press statement which said the Financial Services Reform Bill (FSRB) had been halted indefinitely.
The statement was released with little fanfare but the implications of the news is obvious as four years of hard work pushing for essential changes to the industry now lay stalled.
While the FSRB has met with some resistance it is a change the industry needs.
It will bring together under one roof a number of disparate elements of the industry which have been cobbled together as the industry has grown over the last three decades.
It is also a change that most parts of the industry want bringing in a single set of laws and a unified licensing regime, neither of which can hurt the industry in the long run.
The reason for the halt in proceedings was that the State Governments were not happy with some elements of the new corporations law, most notably those dealing with industrial relations.
The Federal Government needs the assent of the States to cede some of their powers in order for the legislation to be effective on a national basis.
Since the FSRB is part of the creation of a greater corporations law this means that over four years of hard work to create a singular, unified financial services industry has been drawn up short of the finish line.
For some this is not necessarily a bad thing with many life agents happy to remain under the existing system instead of porting their whole business to a new regime.
At the same time it represents a blow to thousands of financial planners who were awaiting the advent of the FSRB so they could register as corporate bodies and sidestep the Alienation of Personal Services Income legislation.
The halt also puts in jeopardy the Australian Security and Investment Commission (ASIC) Interim Policy Statement 146 (IPS146).
ASIC have said that FSRB and IPS 146 were linked with both having a strong emphasis on consistent compliance, education and licensing.
So in effect this halting of the legislation effectively stops a number of urgent and essential changes which the industry has worked towards for some years.
But the biggest danger lies in that the impetus to reform the industry may be lost and mired down in the legal wrangling of the state and federal governments.
Such wrangling has already happened in the choice debate in super and while the momentum is still strong the industry should pressure the Government to remove those parts of the corporations law which make up the FSRB and repackage them as stand alone legislation.
The Financial Planning Association says they are in discussions with the Government about the extent of the latter’s powers and what can be done with the current legislation while ASIC has indicated that IPS146 may be uncoupled from the law to work independently.
This indicates that both the industry and the Government have the desire and determination to see the changes through and if both are genuinely interested in reform this represents a positive course of action in the circumstances.
The bad news is that there is likely to be some more hard work ahead but compared to what has been covered so far it would be a pity to shy away when the end is still in sight.
