Australia’s key financial planning industry organisations have been heartened by a declaration by NSW independent Rob Oakeshott that he will oppose "opt-in" when the Government’s Future of Financial Advice (FOFA) bills are brought before the House of Representatives.
Oakeshott’s declaration, made on national television last week, has added impetus to the lobbying efforts of both the Financial Planning Association and the Association of Financial Advisers (AFA) to bring the other key independents on side, particularly Tasmania’s Andrew Wilkie and the Tamworth-based Tony Windsor.
It is understood that in earlier approaches to Wilkie and Windsor, the two independents indicated they wanted to wait for the findings of the Parliamentary Joint Committee (PJC) reviewing the FOFA bills.
While the PJC is due to report before the end of next week, it is regarded as highly unlikely that its recommendations will include amendments to the Government’s proposed two-year opt-in.
This is because the Minister for Financial Services, Bill Shorten, has remained largely unmoved on the issue throughout negotiations with the industry – something that is expected to be reflected in the attitudes of Labor members of the PJC.
This means that the Federal Opposition will have to specifically move for an opt-in amendment on the floor of the house when the bills come on for debate.
However, while the Labor members are expected to decline supporting changes to opt-in, they are expected to give their backing to a bipartisan report recommending other, less controversial amendments around best interests and fee disclosure – and it is possible Shorten will agree to these changes ahead of debate.
AFA chief executive Richard Klipin last week welcomed the announcement by Oakeshott that he would be opposing the opt-in arrangements, and in particular supported the manner in which the independent MP discussed his approach.
Oakeshott told the ABC’s 7.30 program that, "In regard to the issue of the technical term opt-in, where financial advisers have to write to all their clients and get a written response to keep them as clients every two years, I think there’s a bit of personal responsibility required, a bit of buyer-beware like in any market, and so I think that one element is a bit of over-reach".
"Personally, I don’t think a letter every two years to lock in a client and say, ‘Are you satisfied with me?’ does the job," he said.
"I think it’s full fee disclosure, plus the best interest test that does that.
"I think all we’re adding is an administrative burden and chasing up, you know, clients around the edges, when really no other market that I’m aware of has that similar standard," Oakeshott said.
Klipin said the terms of Oakeshott’s approach to opt-in were heartening, but it would be the attitude of the other independents which would prove decisive.
