Senate super regs disallowance ominous for advice quick wins
The Government’s ability to navigate key financial planning regulatory changes through the Parliament has been thrown into doubt by the Senate’s rejection of key superannuation transparency regulations this week.
While groups such as the Financial Planning Association (FPA) were calling on the Government to extract ‘quick wins’ from the final report of the Quality of Advice Review, the Senate cross-benchers and Greens joined with the Federal Opposition to disallow the regulations removing the need for superannuation funds to disclosed itemised information on donations, marketing and sponsorship.
The Senate’s disallowance of the superannuation disclosure regulations is significant because it signals the possibility of the Government running into trouble in any effort to alter the regulations underpinning financial planning fee consent and, possibly, commissions within the Life Insurance Framework.
While there is no hard evidence that the Federal Opposition would be significantly opposed to changes to the fee consent arrangements, in circumstances where it previously sought to change the Future of Financial Advice (FoFA) arrangements, it may be a different story with respect to some cross benchers and the Greens.
There is also no guarantee of majority Senate support with respect to maintaining commissions in the context of the Life Insurance Framework.
As they have in the past, the financial planning representative organisations may need to be prepared to lobby hard to ensure any ‘quick win’ regulatory changes out of the QAR can actually survive in a delicately balanced Senate.
Bury it all in the next budget. It can pass. But this particular measure was seriously pushing credibility, and should have failed.
As a financial adviser I’m not seeking quick wins. This to me sounds a little like blackmail. Let us get what we want and we will throw you a bone. I question how ethical this behaviour is when our sole focus should be about the Australian Public and how we can provide professional advice at an affordable cost.
The “quick wins” being talked about are removal of excessive regulatory overhead that does nothing to protect consumers, but prevents licensed advisers from providing more professional advice to more consumers at an affordable cost. 100% ethical and 100% in consumer’s best interest.
Levy’s proposal to allow untrained, unlicensed, product salespeople to provide “advice” does not fall in the quick win basket. It is neither ethical, nor in consumers’ best interests. It is unlikely to ever get through parliament and runs the risk of sabotaging all the good proposals. It should be stripped out from the rest of the proposals and discarded.
I apologies for my scepticism and allow me to elaborate on what i mean by unethical. Given that Stephen Jones was found to be trying to water down the reporting responsibilities of superannuation trustees and how coincidently, this relates to Levy’s paper trying to water down personal advice responsibilities for superannuation trustees, I can’t help but fear they will have no motivation to change anything if they can’t get what they want. I absolutely agree with you that “quick wins” removing regulatory burdens on financial advisers are in the best interests of the Australian Public.
Quick wins for product providers probably have more chance of being implemented (in the name of access to advice) than actually removing the administrative burden on licensed advisers (in the name of consumer protection.)
So yeah, wouldn’t be surprised come Xmas that licensed advisers experience little to no change whilst at the same time advice provided by non relevant person operators starts to proliferate – serving to only tilt the playing field heavily to the favour of vertically intergrated, shared cost advice models.
I interpret Levy’s review to be built on a series of considerations which are quite delicately balanced trade-offs. It’s well done.
Unfortunately there is a risk that the balance can be lost by not implementing correctly. There is an additional risk of introducing new problems if implementation is in fact skewed.
I just don’t have any faith in legislators appreciating the complexity of what is being discussed here.
The whole conversation will be reduced to 10 second sound bites….. where shouty people who don’t have a clue control the conversation and colour the consideration.
I’m positive on the content of Levy review, but pessimistic as to what the outcome will be for AR advisers.