The expectation of a change in Government and consequent changes to the Future of Financial Advice (FOFA) legislation has created serious uncertainty and prompted at least one major platform provider, Colonial First State, to adopt a two-stage approach to future platform development.
The strategy was revealed by Colonial First State general manager of strategy Nicolette Rubinsztein, who told a Money Management roundtable last week about the contingency arrangements based on continuing uncertainty around elements of the FOFA changes, such as ‘opt-in’.
"I think there’s been a sort of decline in trust and now, just if we look at the way that we’re going to build opt-in from a platform point of view, we will probably do the IT build in two separate sections," Rubinsztein said.
She said this was "almost on the expectation that the Labor Government will not be elected next time around.
"So we will build the ability to capture the client information and the fee information in the first instance, and then the next build, which only needs to happen in two years time," Rubinsztein said.
Her comments came as other roundtable participants expressed concern at the continuing uncertainty associated with the Government’s three-tranche approach to the introduction of its FOFA legislation, and the manner in which this had been magnified by the surprise imposition of an annual fee disclosure obligation.
The participants were united in suggesting the continuing uncertainty made the Government’s timetable for implementing its legislative package inappropriate.
Matrix Financial Planning managing director Rick Di Cristoforo said the deadlines being imposed by the Government were inappropriate given the amount of work financial services companies would need to carry out to meet their FOFA requirements.
He said there were legitimate arguments for extending the start date.
"You only have to think back to how long the industry was given, rightly, to implement Financial Services Reform (FSR)," he said. "You know we didn’t get six, seven, eight months to implement FSR – and FSR you could now argue was less of an impost on the industry than FOFA will be or any individual part of FOFA," Di Cristoforo said.
Association of Financial Advisers chief executive Richard Klipin also questioned the appropriateness of the timetable in circumstances where the Government had introduced an element such as annual fee disclosure requirements without reference to the broader industry.
"It kind of brings into question what’s the whole thrust here, because the playing field keeps on shifting and big businesses and small are making big decisions about getting ready, because the 1 July 2012 deadline really hasn’t changed. It’s entirely unreasonable for the landscape to shift that dramatically in the space of weeks from what we saw," he said.
