Is the advice legacy of the Morrison Govt cost and complexity?
Financial advisers can relax, for now, the Parliament has risen for its summer recess and legislation such as that introducing the compensation scheme of last resort (CSLR) will sit mouldering on the notice paper until Parliament resumes. If it resumes.
If, as some are predicting, the Prime Minister, Scott Morrison calls a March election then the Parliament will not sit again at all and, notwithstanding bipartisan support, the CSLR may not become reality until at least the second half of next year.
And while advisers have faced a barrage of change and associated cost, so too have superannuation funds.
But as we wrap up 2021, it is worth reflecting that in the almost three years of the Morrison Government it has delivered more legislation and amending legislation impacting financial advisers than any of its predecessors.
While the Future of Financial Advice (FoFA) legislation was a child of the last Federal Labor Government, here it what has been delivered affecting financial advisers over the past 27 months in the form of both legislation and regulation.
- Your Future, Your Super legislation
- Treasury Laws Amendment (Reuniting More Superannuation) Act 2021 Financial Sector Reform (Hayne RoyalCommission Response—A New Disciplinary System for Financial Advisers) Bill 2021
- Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021
- Financial Services Compensation Scheme of Last Resort
- Financial Services Compensation Scheme of Last Resort Levy (AFCA Fees)
- Superannuation Portfolio Holdings
- Design and Distribution Obligations
- The FASEA legislation
- Ending Grandfathered Conflicted Remuneration for Financial Advisers
This list does not take account of other work undertaken by the Coalition in Government, not least the Life Insurance Framework (LIF) and the initial aftermath of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services.
And, along the way, as the financial planning and superannuation industries fought back about the implications and costs of its legislative package, the Government made some good decisions, not least winding back the Australian Securities and Investments Commission (ASIC) levy.
That decision, announced in August, saw the Government impose a two-year pause on the levy, restoring it to the 2018-19 level of $1,142 per adviser.
Of course, the levy might have been so much of an issue if the Coalition Government had not introduced the regime in 2017 mightily encouraged by then ASIC chair, Greg Medcraft.
Then, too, the Government decided to effectively remove the Financial Adviser Standards and Ethics Authority (FASEA) board by devolving FASEA’s function to Treasury and ASIC, albeit that the underlying FASEA regime remains unchanged.
It remains to be seen what happens to the problematic Standards 3 and 6 of the FASEA code of ethics, currently the subject of consultation but also open to time-scale erosion because of the looming election.
Among the policy issues kicked down the road by the Government has been the future of the Life Insurance Framework (LIF) which has been wound into Treasury’s broader Quality of Advice Review, albeit that ASIC will still be the source of the data and analysis Treasury uses to evaluate the LIF.
As Financial Newswire’s recent financial planning roundtable revealed, the cost of regulation is driving financial advice beyond the reach of many ordinary Australians and the governing legislation is closing in on the Tax Act for scale and complexity.