Election brings few sad faces in financial services

The re-election of the Liberal/National Country Coalition Government under Prime Minister, Scott Morrison, is being widely regarded as a win for the financial services industry although views in the superannuation sector are more mixed.

The re-elected Coalition is being welcomed by fund managers, financial planners and self-managed superannuation fund (SMSF) trustees because it means there will be no change to the situation around refundable franking credits or capital gains tax.

It is being welcomed by residential property investors and their planners because it means no change to the negative gearing arrangements.

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The status quo also means that there will be no reduction in the annual non-concessional contributions cap, which the Labor Party had proposed would be reduced from $100,000 to $75,000.

However, it is receiving a mixed welcome from superannuation funds and insurers because of the likelihood that the re-election Government will restart the passage of legislation impacting insurance inside superannuation.

SMSFs have emerged as particular winners because of the certainty around refundable franking credits and because the Coalition had made clear that it was intending to allow borrowing within superannuation.

The Coalition’s policies had been criticised by the Australian Institute of Superannuation Trustees for doing very little to improve equity and the long-term sustainability of superannuation, with the industry funds body claiming its policies would largely benefit those with the means to make large voluntary contributions.

However, the Coalition has committed to the substantial implementation of the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry meaning that grandfathered commissions will be ended according to the Government’s time-table.

However, there is still hope for life/risk commissions, with the Government having previously signalled its intention to allow the Life Insurance Framework and its review to run their course.

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The AIST can go and do the Bill thing.
When all said and done they are in the very same family.
Brothers and sisters, comrades in arms, solidarity forever.
Well there wasn't as much solidarity flying around on Sat as smiling assassin Bill thought there was.
The next step for the Liberal Party is to put legislation in place that will forever cease the flow of Industry Super Funds members monies to the trade union movement in the form of donated and/or re-directed Directors Fees.
Will the AIST under the requirement of Trustee member best interest duty agree to have this practice ceased effective immediately ?
Maybe Money Management may wish to pose this question to them and report back.

Now it is time to dump the FPA and and have the AFA co-ordinate with the MFAA and FBAA. The FPA and FASEA are beholden to CBA who are putting their resources behind CountPlus for all non-union credit and financial advice to be run through Accountants. From there they can go head to head against IFM. The AIOFP need to pick a side to maintain relevance after their disastrous call to action pre-election.

Tim MacKay is looking very sad today. Perhaps the most upset in financial services? This is his post this morning: "LinkedIn is not about politics. You can post or like political comments from either side on LinkedIn sure, but I don't have to listen to it."

Not sure it is a win when Labor supported so strongly the #morethan4 legislation to ensure the customer owned sector is not legislated out of the market

Last night Anthony Albanese was asked why Labor lost the election and whether the issue in relation to the removal of franking credits was a major contributor to the loss.
He responded by referring to the fundamental mistake they had made by proposing to "change the rules midstream".
He then continued to define that when people plan ahead around a certain set of existing rules that it is not acceptable to change those rules retrospectively.
On 29th August, 2011, then Minister for Financial Services, Bill Shorten, announced.........
" Following legal advice from the Australian Government Solicitor, the Government has determined that the ban on conflicted remuneration (including the ban on commissions) will not apply to existing contractual rights of an adviser to receive ongoing product commissions."
The proposal to ban grandfathered commissions in relation to existing clients and their adviser is fundamentally wrong as there has already been a line in the sand determining the discontinuation of those payments on new business.
It is fundamentally wrong that a legally approved remuneration model is retrospectively removed thereby increasing the potential for the existing client to pay more for advice, lose existing benefits based on legislative treatment of product and/or insurance cover that is attached to existing product and remove continuing remuneration and business value from the adviser.
This is also no different at all in respect to the potential push to ban insurance commissions.
The Life Insurance Framework was finally determined after much negotiation and both adviser and insurers have made structural and remuneration adjustments to business models based on existing legislation.
It is again fundamentally wrong to engage in the process of changing rules midstream after the commitment of significant resources to adjust to business rules that have been introduced after many, many years of an alternative model.
So, Josh Frydenburg...... you think carefully about the post Royal Commission feeding frenzy and the immediate political pressure at the time to move forward with some of Hayne's recommendations because your constituency has given you a second chance to act much more like a Liberal Government that actually supports small business rather than tearing it apart.
Scott Morrison believes in "a fair go for those who have a go" and I don't know of too many financial advisers that aren't truly dedicated and committed to the well being of their clients and who are "having a go" every day of every week of every year.
The Liberal Government now have an opportunity to not kick to death the very people who have supported them over many many years, despite the lack of support and understanding they have shown to date.
Don't waste the opportunity.

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