Money Management congratulates the Coalition Liberal and National Parties on their convincing win at the 7 September Federal Election. However, in doing so, this publication also urges the Abbott Government to move as quickly as possible to remove the uncertainties plaguing the financial planning industry.
While accepting that it takes at least a week for a new Prime Minister and his senior colleagues to determine the final make-up of a new Cabinet and outer-Cabinet, there are a number of issues which need to be resolved to allow the financial planning industry to resume business in a positive and commercially realistic environment.
Top of the list is the issue which served to virtually end mobility within the financial planning industry for the duration of the election campaign – grandfathering, and whether a change in licensee alters the status of the relationship between a planner and a pre-existing client.
As things stood before the election, there seemed to be an acceptance that in the absence of a specific clarification on the part of Treasury, a planner who changed licensees lost grandfathering with respect to commercial arrangements with pre-existing clients. Hardly surprisingly, this brought planner migration to a standstill.
In his capacity as Shadow Assistant Treasurer, Senator Mathias Cormann indicated before the election that he was sympathetic to the concerns being expressed by the industry on grandfathering, so it is to be hoped that he or whoever else takes charge of the financial services portfolio sends the appropriate signals to the Department of Treasury which, in turn, then issues the appropriate guidance to the industry.
Equally, while it is true that the Australian Securities and Investments Commission (ASIC) must administer the law as it currently exists with respect to the Future of Financial Advice (FOFA) legislation, it is not beyond the scope of any senior public servant such as the ASIC chairman and his most senior executives to do so in a way that reflects the inevitability of change.
The regulator has, in any case, signaled that it will be taking a facilitative approach with respect to the industry’s compliance with the FOFA legislation, so it should be a very simple matter for its officers to exercise sensible discretion, especially where to do otherwise would only serve to impose an unreasonable administrative and financial burden on financial planning practices for no practical outcome.
It is an unfortunate reality that there are elements of the FOFA legislation which reflect political rather than practical agendas. The new Abbott Government would do well to remove the politics without injecting its own.
