What's the deal with FOFA?

by Calida Smylie26 Mar 2014
Assistant Treasurer Arthur Sinodinos’ shock resignation from the job last week due to corruption ties threw a spanner in the works of Future of Financial Advice amendments getting pushed through into legislation – but what is actually happening now?

On March 20, a couple of days after the resignation, the senate referred the Streamlining of Future of Financial Advice Bill 2014 to the senate economics and legislation committee for inquiry and report.

Sinodinos’ replacement, Finance Minister Mathias Cormann, then announced on the Parliamentary website on Monday he had frozen the planned tabling of the regulations in order to consult with stakeholders.

Cormann decided to put the implementation of the regulations on hold in light of the recent decision to refer the legislation to the Senate Economics Committee.

He said the tabling of the regulations will be paused during the committee consultation, which is due to report back on June 16.

With many aspects of the Labor government’s financial advice changes due to come into effect on 1 July, this will give the coalition only a few weeks to push through the FOFA changes after the outcome of this report.

However, Cormann does not seem to be worried at the setback.

“The government remains committed to implementing the improvements to Future of Financial Advice laws that we took to the last election as soon as possible,” he said.

“These election commitments are reflected in the legislation currently before the house of representatives, which will continue through the normal parliamentary process.”

But shadow Treasurer Chris Bowen was quick to accuse the Abbott government of playing political games with the legislation by freezing it to prevent it from damaging their prospects in the Western Australian Senate election in April, the Sydney Morning Herald reported.

The referral of the legislation and the temporary pause called by Cormann effectively halts any further movement on FOFA, leaving financial advisers as they were prior to the amendments being announced on 20 December last year.

On that date, Sinodinos announced the package of proposed changes to FOFA, and invited submissions which closed on 19 February this year.

Fifty-seven submissions were received, including from the Financial Services Council and Yellow Brick Road Wealth Management.

Cormann wrote in Monday’s Australian Financial Review that there had been a lot of “misinformation” about the government’s planned improvements to the financial advice laws and their impact on people seeking advice for their retirement.

“Some of it has been deliberate and mischievous, while some of it reflects a genuine lack of understanding of what is proposed. It has, however, created a level of unnecessary concern and confusion for those who believe everything that has been written, especially those saving for their retirement.”

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