It is now certain the industry funds' campaign against adviser commissions will continue. Far less certain is the manner in which the minority Australian Labor Party Government will conduct affairs of state and how this will affect the financial services industry.
Two things happened last week — one certain, the other far less certain. The certainty is that the industry funds campaign against adviser commissions will continue.
Far less certain is the manner in which the minority Australian Labor Party Government will conduct affairs of state and how this will affect the financial services industry.
The certainty that financial planners will continue to be painted as bogey men came when the chairman of Industry Funds Management, Garry Weaven, told a conference that real victory had not been achieved in the campaign against commissions — only an intellectual victory.
Weaven, who has been a driving force behind the multi-million dollar industry funds campaign, foreshadowed no let up, claiming he would not be allowing the financial services industry to “win the peace” by reinventing commissions in another guise.
Just hours later, the two NSW country independents backed the Australian Labor Party to form a minority Government, prompting a number of financial planning lobby groups to call for continued discussion around the Future of Financial Advice reforms.
But, as well-meaning as those calls from the financial planning industry may have been, they were arguably premature in circumstances where the Prime Minister, Julia Gillard, had neither named her Cabinet nor outlined her legislative priorities in the new finely-balanced political milieu.
As focused as the financial services industry may have been on reform, the political realities confronting Gillard and her team are likely to make financial services a low order of priority and superannuation funds can no longer be certain the superannuation guarantee will be raised to 12 per cent.
If the Gillard Government is to survive long enough to see the Greens gain the balance of power in the Senate next year then it will need to move cautiously and pursue policy objectives capable of generating bi-partisan support.
While the major parties appear broadly agreed on the need to separate product sales from financial advice, there is a considerable divergence of views on the overall future of commissions, particularly with respect to insurance.
Thus, the financial services industry should expect movement on only the obvious and the do-able — things like the Cooper Review’s efficiency measure, SuperStream, and those elements of the Future of Financial Advice reforms capable of being navigated through both houses of the Parliament. Nothing more, and possibly a good deal less.
The first few months of the new Government will see it testing the boundaries of what is and is not possible and significant changes to financial services will not fall within those bounds.
Perhaps the first sign of how much priority will be given to financial services will lie in the naming of the minister to handle the portfolio. Anyone more junior than the pre-election incumbent, Chris Bowen, will signal that the Government’s mind is elsewhere.
