Aussie Financial Services Industry Bats for 1-Yr Delay of FoFA Reforms
Complicated adjustments and the ongoing Labor leadership row should convince the federal government to give some breather to the financial services industry and delay its scheduled revamp July this year.
According to the Financial Services Council (FSC), the reform provisions embodied in the Future of Financial Advice (FoFA) need more legislative tweaks and the with the Labor-led government undergoing some form of overhaul, it may take some time for the Parliament to finally deal with the problem.
The FSC, according to BusinessDay, is convinced that moving FoFA's implementation to July 2013 would at least provide more leeway for the industry to roll out changes that were otherwise too complex for practical application over the next few months.
The complexities claimed by leading industry players have been acknowledged by the Australian Securities and Investments Commission (ASIC), which has indicated its willingness to provide some allowance for violations in the initial year, BusinessDay reported.
However, pushing back the FoFA for another 12 months would allow industry players to rake in commissions of up to $150 million from an estimated 170,000 new clients that the industry would attract within the period, according to The Age.
Industry lobbyists maintained that the amount is a small price to pay if only to ensure that FoFA will work following crucial adjustments, hence the significance of its deferral for next year.
"Given the important symbolism of the reforms, a delay may be worth it, especially as both major adviser associations have already accepted commissions on investment products should be eradicated," Rainmaker Information director of research Alex Dunnin told BusinessDay on Monday.
Dunnin noted too that the amount cited by The Age was but a fraction of what the industry had collected as commissions in 2010, which reached more than $6 billion.
Yet delaying FoFA's implementation should be out of the question, according to Industry Super Network chief executive David Whiteley, despite claims of daunting issues that could crop once it takes effect this year.
"There's no reason why people cannot be getting advice that is in their best interests, without commissions, from July 1," Whiteley was reported by BusinessDay as saying.
"We don't think a wholesale delay is justifiable or necessary, but we recognise there are some practical issues around systems changes," he added.
And the final decision rests on Financial Services Minister Bill Shorten, whose office has indicated that a ruling on the matter will be out soon though it remains unclear if the delay sued for by the industry will be granted.