Close watchers of the financial services industry will have noted that for a period of about 18 months to the end of 2013 an informal truce seemed to exist between the Financial Planning Association (FPA) and Industry Super Australia (ISA) during which few harsh words were exchanged and the industry funds toned down the anti-planner elements of their television advertising.
It was a truce which grew out of the negotiations and accommodations which led to the passage of the Future of Financial Advice (FOFA) legislation through the Parliament, but it is a truce that well and truly ended when the newly-elected Abbott Government delivered on its pre-election promise to roll back key elements of the FOFA regime.
Defying the conventional wisdom that sensible lobby groups adapt to protect their interests following a change of Government, Industry Super Australia, supported by a number of commentators, has sought to challenge the validity of the Government’s FOFA changes by claiming they would be detrimental to consumer interests.
The ISA has, in particular, sought to single out the changed wording around client best interests to prosecute its arguments and it has found a ready audience among some consumer groups and in some daily newspaper columns.
The FPA and the Association of Financial Advisers have counter-punched, with FPA chief executive Mark Rantall effectively describing the ISA’s claims as being nothing more than the prosecution of vested interests.
“We are witnessing an extraordinary effort by product providers and those who represent them to build a political position – based on flimsy arguments – in defence of a redundant section of FOFA pertaining to the best interests duty,” Rantall said, before going on to detail why, precisely, the FPA believed the ISA and its supporting commentators were wrong.
The FPA has not been alone in challenging the contentions of the ISA, with the Financial Services Council moving from having declared a policy-making alliance with the ISA during its national conference in Brisbane last August to directly confronting the industry funds on both FOFA and the default funds under modern awards regime.
Where the FPA’s Mark Rantall did not mince his words in countering some of the claims from the ISA, the FSC’s chief executive, John Brogden, was equally steadfast – particularly with respect to the manner in which the current default funds under modern awards regime has represented a “closed shop” for both the unions and employers who back particular industry superannuation funds.
The bottom line has been that with a change of Government and a rolling back of the FOFA changes so vigorously pursued by the industry funds has come a resumption of the “them and us” rhetoric which characterised the relations in the industry before 2012.
However, in terms of public perceptions of the value of advice, it is not a good look.
