The reality is Jones has kicked the MIS can down the road

Mike Taylor

Managing Editor/Publisher, Financial Newswire

10 March 2023

EDITORIAL

It will be lost on no one in the Financial Planning profession that the Government’s announcement of a review of the Managed Investment Scheme (MIS) regime has all the hallmarks of a political sop.

The fact that the Assistant Treasurer and Minister for Financial Services, Stephen Jones announced the review of the MIS regime on the same day he reintroduced the legislation underpinning the Compensation Scheme of Last Resort (CSLR) to the Parliament should tell advisers all they need to know.

Throughout the debate about the funding of the CSLR financial advisers kept arguing for the funding base to be extended to cover MISs because, quite simply, the Australian Financial Complaints Authority (AFCA) consistently pointed to managed investment schemes as being problematic.

Outside of the AFCA data there was also the news reports of the collapse of schemes such as Sterling Financial, to name but one.

So, what does Jones’ announcement of a review of the MIS regime achieve? Nothing immediate and certainly nothing which will alleviate the cost of the levy being imposed on advisers and credit providers to fund the CSLR.

Because the bottom line of the minister’s announcement is that it represents a process that will take right up until the next Federal Election before it is complete.

By Jones’ own admission the “Treasury will release a public consultation paper by mid-year and consult with industry before reporting findings to the Government by early 2024”.

Based on the average time taken for such consultations to be undertaken and then translated into legislation, the Government would need to be rushing for any changes to be canvassed before the end of next year with any consequent legislation unlikely to be ready before the first half of election year 2025 at the earliest.

So, financial advisers can hardly be blamed if they believe that what Jones has done is simply paid lip service to their concerns about the funding of the CSLR and has kicked the can down the road.

In the meantime, there will have been at least two cycles of the CSLR levy before anything is done.