While the ultimate shape of FOFA might depend on who wins the next Federal election, financial planners will have a busy year ahead nevertheless, writes the FPA’s Dante De Gori.
For a number of years now the agenda of reform and change affecting the financial planning profession has been ever present.
Year 2012 was a year that the profession will not forget in a hurry, with the passing of some fundamental pieces of legislation that will change the financial planning profession forever – in particular the Future of Financial Advice (FOFA) reforms.
If we take a quick step back in time we can track the timeline of change as follows:
- 2009 – The Parliamentary Joint Committee (PJC) inquiry hands down its report into the collapse of Storm Financial
- 2010 – Government responds to the report and announces policy on FOFA reforms
- 2011 – After more than a year of consultation, Treasury releases draft FOFA legislation
- 2012 – FOFA legislation is passed by Parliament into law
- 2013 – FOFA commences.
As you can see, we have navigated through inquiries, debates, consultation, draft legislation and political negotiations to be at the current point of implementation.
Year 2013 is the year of FOFA, with the countdown to 1 July 2013 being as eagerly anticipated, in some quarters, as the countdown to Y2K.
We will start the year finalising Regulatory Guides with the Australian Securities and Investments Commission (conflicted remuneration); better understanding the process for approving codes of conduct to obviate the need for opt-in (RG183); and we will see the introduction of legislation to enshrine the terms financial planner and financial adviser into Parliament.
Further, we will see regulations enacted to replace the accountants’ exemption with a limited form of licence; draft legislation on Tax Agent Services Act to incorporate financial planning and the Government’s response to Richard St John on the need for a last resort compensation scheme; and the PJC report on the collapse of Trio Capital.
Just as in 2000 with the concern ahead of Y2K, 1 July 2013 will come and go without event and incident.
However, the year will not be without its share of excitement – the election, whenever it is held, will be the news story that will dominate 2013. A question to consider is how the election result will impact on the financial planning profession. In my view:
Should the Government retain power
For financial planners the FOFA reforms will remain unchanged, opt-in will be required in 2015 and class order relief will be provided from opt-in for those financial planners who are members of a professional body with an approved code of conduct. We may have a ministerial reshuffle, and further tinkering of superannuation to improve the Federal Budget is likely.
Should the Coalition win Government
For financial planners there will be an expectation that the Coalition will deliver on their 16 recommendations to “fix” FOFA, such as the removal of opt-in, and that amendments to the fee disclosure statement only apply to new clients.
The current Shadow Minister will retain his portfolio, and a work program will include a high-level review of the financial services system and a red tape overhaul for small businesses.
The agenda to balance the Budget will see no immediate change to the concessional contribution caps for superannuation members.
In summary, no matter who has power in 2013, the year ahead will bring further clarification on FOFA.
The financial planning profession will continue to grow; the term financial planner and financial adviser will be legislated in law; accountants will begin to become licensed to provide advice; financial planners will become subject to the Tax Agent Services Act; we will have an election and the formation of the 44th Parliament; the Swans will go back-to-back; Sydney FC will not finish last; and NSW will finally win the State of Origin.
Dante De Gori is general manager of policy and government relations at the Financial Planning Association.
