Brad Fox

The Association of Financial Advisers (AFA) has welcomed the release of the finalised Grandfathering regulation and the passing of the Tax Agent Services Act (TASA) amendments in the Senate.

Brad Fox, Chief Executive Officer of the AFA, said although finalisation of the Grandfathering regulation has been a long time coming, the outcome is appropriate. “The industry now has another 12 months to prepare for the full implementation of some of the critical elements of the conflicted remuneration obligations,” Mr Fox said.

Grandfathering for platforms was omitted from the original Future of Financial Advice (FoFA) Bill. This omission was corrected via regulation in September 2012.

“A draft regulation, changing the impact of Grandfathering, was released in March 2013, however this was not finalised until the very last minute,” he said. “The finalised regulation contains some additional elements that were not in the draft, including grandfathering for employee arrangements.”

Mr Fox said the additional clarity on the Grandfathering of employee remuneration arrangements for both salaried licensees and salaried advisers within an Authorised Representative business is welcome.

“In the absence of this regulation, the implications of changing employee remuneration arrangements were most concerning,” Mr Fox said. “The cost impact of these changes is significant, so adequate time for implementation is particularly important.”

Mr Fox also said that the finalisation of the TASA amendments in the Senate on Friday is also a step in the right direction.  “The delay in the commencement of the TASA for financial advisers to a 1 July 2014 start date is a sensible outcome, particularly given the industry’s huge commitment to becoming FoFA compliant.”

Without the passing of the legislation, Mr Fox said the industry faced a fundamental legislative problem from 1 July.  “Fortunately the passing of this legislation in the Senate has alleviated this complication,” he said.  “With FoFA and MySuper starting yesterday and TASA now on the horizon, the financial advice industry faces a very challenging time.”

Mr Fox said the AFA is working towards helping advisers with the implementation of FoFA changes.

“Advisers are doing everything they can to implement these changes and we really need to support them,” he said. “Gaining some clarity around these issues has been beneficial to the industry as a whole.

The AFA’s Chief Operating Officer (COO), Phil Anderson, will share the AFA’s insights into the implications of this regulation for advisers during the AFA’s National Road Show this month.

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“The Government has announced that MySuper legislation will apply from 1 July 2013 but to date Treasury has not provided any detail relating to grandfathering that will allow those of us who deal with ordinary super to make changes to the way we do business,” said CSSA President, Douglas Latto.

Treasury has made announcements relating to grandfathering and how it applies to non-platform related superannuation and investments, but has so far not released any details relating to platform superannuation and investments.

“The only announcement Treasury has made is that it intends to make an announcement,” Mr Latto said. “For those of us who work with corporate super funds, this is simply not good enough. We need to know now what the ground rules are so that we can make the changes we need to make in order to get on with business.”

The CSSA is calling for clarity on which forms of remuneration will be grandfathered in the MySuper regime and which will not.

“The questions we need answered are whether or not those of us who deal with corporate super funds will be able to be reimbursed for the work we do with companies and their employees,” Mr Latto said. “Are we going to continue to receive insurance commissions? Should we be converting clients to fees? Are fees going to be any more acceptable than commissions? We really don’t know and as long as we don’t know, we can’t move forward.”

Mr Latto said at an industry level lack of clarity from the Government around the MySuper legislation is stalling the development of MySuper products.

“It’s a problem that affects not just those of us who work with corporate super funds, it’s an industry-wide problem,” he said.  “We are all stuck in this hiatus waiting for the Government to make announcements and all the while, the 1 July 2013 deadline hurtles towards us.”

Mr Latto said the CSSA is calling on the Government to furnish the detail the industry needs in order to operate in the MySuper environment without further delay or move the implementation date until 2014.

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