Something became very clear when Money Management last week conducted a roundtable focusing on the Future of Financial Advice (FOFA) legislation tabled in the Parliament earlier this month – the Government had missed a golden opportunity to deliver a reform package capable of being embraced by an entire industry.
What was confirmed by the roundtable was that the broad support the financial planning industry had found itself able to deliver to the findings of the Parliamentary Joint Committee on financial services (the Ripoll Inquiry) had been eroded by the Government’s subsequent handling of its FOFA agenda.
Further, what little trust remained that the Government had the ability to deliver a balanced approach to its FOFA changes utterly evaporated when the Assistant Treasurer and Minister for Financial Services, Bill Shorten, blindsided many industry participants by including an annual fee disclosure requirement in the bill.
Industry organisations whose job it is to lobby the Government and extract the best possible deal for their members are not in the business of calling a spade a spade; they know only too well that politicians have a capacity to punish those they see as being unduly critical.
Certainly, the Association of Financial Advisers (AFA) has been made to pay a price for its overt criticism of the minister.
However, the Government’s treatment of the AFA seems to matter little in circumstances where those organisations which have adopted a more diplomatic approach have found themselves trying to explain difficult realities to their members relating to issues such as retrospective fee disclosure.
No one can deny that the Government has undertaken the usual consultative processes associated with the development of key reforming legislation, but that has not served to dispel the perception that the views of some participants have weighed more heavily than those of others.
The Money Management roundtable revealed a genuine belief on the part of virtually all the participants that the views of the Industry Super Network (ISN) and consumer group Choice had weighed more heavily than those of either the Financial Planning Association or the AFA.
Further, the participants believed the ISN had been influential in the minister’s ultimate eleventh hour decision to include the annual fee disclosure requirement.
With further tranches of the FOFA legislation due to hit the Parliament in coming weeks, the Government needs to understand that trust in its processes is now in very short supply.
The Government and Minister Shorten might also care to reflect that it might have been possible to deliver a reform package carrying broad industry support if it had stuck to the findings of the bipartisan Ripoll Review, rather than following the narrow agenda prescribed by those perceived to be its political allies.
