John Brogden

The financial advice industry is open to any Parliamentary inquiry provided it focuses on the future, not just the past, the Financial Services Council said yesterday.

John Brogden, CEO of the FSC said: “The industry is an open book. We will work with any public inquiry.”

He was speaking in response to an announcement made by the Leader of the Opposition − The Hon  Bill Shorten MP, Shadow Treasurer − The Hon Chris Bowen MP and Shadow Minister for Financial Services and Superannuation – The Hon Bernie Rippoll MP yesterday which called for a Senate inquiry into the financial advice sector.

“However, the Parliament needs to ensure they review whether  the Opposition’s FoFA laws will actually deliver more affordable and accessible quality advice – as promised when they announced the FoFA legislation in April 2010,” Mr Brogden said.

“Everybody agrees more Australians should get financial advice.”

“Whilst FoFA has delivered reforms over the past five years that give the best consumer protections in the world, it will fail if millions more working Australians do not seek financial advice.”

“We believe the Government’s proposed changes to FoFA will make advice more affordable and accessible while maintaining quality and consumer protection.”

Mr Brogden also said: “The financial advice industry has been through several inquiries since the GFC which have resulted in significant legislative changes,” Mr Brogden said. (* see Appendix)

“We are still in the process of implementing the MySuper, FoFA and TASA regimes which are the result of inquiries into all aspects of financial services practises from 2009 to date.”

Mr Brogden also said the Parliament needs to remember that consumers will end up bearing the costs of any new regulation.

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Financial advisers will continue to be licensed (or authorised under an Australian financial services licensee) by ASIC and adviser obligations under the Corporations Act 2001 (Corporations Act) remain unchanged.

Until 31 December 2015, AFS licensees and their authorised representatives who provide a tax (financial) service can either:

• notify the TPB to become registered as a tax (financial) adviser, or
• use a relevant disclaimer when they provide tax (financial) advice services for a fee or other reward.

This option is the first phase of the progressive introduction of registration of tax (financial) advisers that will continue over the next three years.

Commissioner Greg Tanzer said, ‘ASIC and the TPB have been working cooperatively for many months to ensure the smooth transition of the new regulatory regime.

‘This has included sharing information from ASIC registers with the TPB to cut red tape and streamline the tax (financial) adviser registration process.’

ASIC and the TPB will continue to work together as the regime is implemented.

More information can be found on the Financial advisers providing tax advice page of the ASIC website and TPB website.

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Dante De Gori

Australia’s professional financial planners remain vigilant to key legislative changes, seeking to clarify the full requirements of both the Future of Financial Advice (FoFA) and Tax Agents Services Act (TASA).

This is the dominant observation derived from the first round of the Financial Planning Association (FPA)’s National Roadshows underway across the nation from April until June.

Three of the 34 scheduled Roadshows have taken place, with the recently-held Perth event reaching record attendee numbers as 300 advisers attended the full capacity event. There was also an overwhelming response in Tasmania where nearly 100 members attended. The FPA is expecting over 2,500 attendees nationally before the Roadshows wrap up in South East Melbourne on the 19 June.

Dante De Gori, General Manager of Policy and Conduct at the FPA, said that these record numbers are a clear indication that advisers are aware that they need to be prepared for the 1 July legislative deadlines and are seeking support towards this goal.

“The feedback from our ‘Bulletproof’ Roadshows in 2013 was that financial advisers wanted more information about TASA and FoFA and what was required of them in compliance terms.

“The aim of the current series of Roadshows is to not only update and educate planners, but also answer any questions or concerns they have regarding specific aspects of the regulation and how this will affect them,” Mr De Gori said.

Mr De Gori indicated that the majority of questions raised concern the specifics of what planners need to do to be ready for the 1 July, 2014 implementation date.

“With the TASA extension granted to financial planners last year, we had more time as a profession to prepare for its implementation and to ensure members were equipped and ultimately in a position to deliver the best outcomes for consumers,” Mr De Gori said.

In a new event format, the FPA has partnered with Platinum Asset Management to provide an update on the state of the global economy. Kerr Neilson, Platinum Asset Management’s co-founder and managing director, has been discussing current offshore investment opportunities with a focus on key economic themes and global companies.

Financial planners in Melbourne, Sydney, Brisbane, Darwin and several regional locations are still able to sign up to their local Roadshow. The events are free to attend. Each covers:

Capital city events will also include the presentation from Platinum Asset Management, detailing the behavioural challenges investors are facing as well as current global economic trends.

The events are also open to non-members and attendees will be given a ‘Guide to TASA’ to take away. This includes a collection of fact sheets with practical tips and guidance on planner obligations under the TASA regime. Event dates and registrations for the Roadshows can be found at www.fpa.asn.au/roadshow.

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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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Brad Fox

The Association of Financial Advisers (AFA) notes the introduction of legislation relating to the Tax Agent Services Act (TASA) and welcomes greater certainty on the matter for advisers.

“We are pleased that common sense has prevailed and acknowledge the support of the Coalition and the Independents, as well as the Financial Services Council (FSC) and the Financial Planning Association (FPA) in collectively lobbying on the issue,” said AFA CEO Brad Fox.

In particular, the AFA welcomes the extension of the current exemption for financial advisers from TASA until 30 June 2014.

“The delay in implementation is essential given the regulatory overload the industry is already dealing with,” Mr Fox said. “It would have been an unfair and unreasonable expectation and an all but impossible rush for advisers to be ready for TASA by 1 July 2013.”

Mr Fox also welcomed more clarity around the definition of tax (financial) advice services, its interaction with the current Tax Agent Services regime and the definition of ‘tax agent services’.

“Getting the definitions right by way of regulation will give all interested parties an appropriate opportunity to make the legislation work in practice,” Mr Fox said. “The AFA looks forward to working with Treasury and the Tax Practitioners Board on this next vital step.”

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AFA Chief Operating Officer Mr Phil Anderson said, “This is a good outcome for financial advisers, as the TASA amendments incorporating financial advisers were flawed and there was both a lack of adequate consultation and seriously insufficient time for implementation.”

Mr Anderson said the AFA is particularly pleased that the Government has responded to feedback from the industry and, most importantly, feedback from financial advisers who sought to have changes made to the legislation and a delay in the commencement.  “Without adequate review there was a serious risk that this legislation would result in significant unintended consequences,” he said.

“The AFA accepts that financial advisers will come under the TASA regime, however it needs to be done in a way that allows for appropriate consultation and sufficient time for implementation.” 

Mr Anderson said the Government has had three years since the TASA regime commenced to address the issue with the application to financial advisers.  “A further delay of 12 months, in order to get this correct is an appropriate way to manage the issue.” 

In response to suggestions that clients could be disadvantaged by a delay in the commencement of the application of TASA to financial advisers, the AFA maintains that the qualifications obligation did not commence for some time for existing advisers and client complaints would have been addressed under the existing Australian Financial Services Licensing arrangements, as they always have.

“We are thankful for the support of our members who have taken an interest in this issue and those who have made efforts to talk to local members of Parliament to ensure the outcome that has been achieved today,” Mr Anderson said.

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The move was declared a win both for common sense and due process by the Financial Planning Association (FPA). The FPA cited the Bill’s many outstanding unresolved issues and missing detail as more than good reason for its referral.

Dante De Gori, General Manager Policy and Conduct said:

“The FPA was concerned that the need to pass legislation was prioritised over the need to follow due process, consultation and developing legislation that will actually work. So we applaud the decision to give development of the Bill more time and more work.

“Financial Planners are licensed and regulated by ASIC to provide personal financial advice, which includes tax advice within the context of financial advice. Scare mongering by accounting bodies on this issue has been misleading and unhelpful. The fact is that the FOFA regime starting on 1 July 2013 implements some of the greatest reforms to the financial advice profession ever seen, in particular the best interest duty. So we are disappointed that the government initially succumbed to this unsubstantiated scare mongering on related issues.

“Our objection has always been that this Bill should be all about actually delivering what it is supposed to deliver. It is emphatically not about financial planners shying away from improved competencies and training. FPA members are held to the highest standards available in financial planning, both domestically and internationally: that is, to CERTIFIED FINANCIAL PLANNER® (CFP) level.

“Our CFP professionals have had to reach the highest educational standards in the world. We don’t and never have doubted that they will also meet any new competency requirements.  

“As it stands there are too many outstanding questions on this Bill with no time given to the financial planning profession and the wider financial services industry to implement associated reform by the 1 July 2013 deadline. Its referral to the PJC is the right result. We look forward to contributing to the PJC Inquiry to ensure this Bill will ultimately deliver what it’s intended to,” concluded Mr De Gori.

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