The Future of Financial Advice Bill (the FoFA Bill) introduced into Parliament yesterday by the Minister for Financial Services and Superannuation, Bill Shorten, will, according to Rice Warner Research cited in the Explanatory Memorandum (EM), almost halve the number of advisers operating in the industry by 2024, cut adviser revenue by $2.5 billion and change the fundamental characteristics of people providing advice to everyday Australians.
“It is almost inconceivable in the twenty-first century that a Government would put forward legislation that intentionally annihilates the small business sector of an industry, while pandering to another sector and then dress it up as acting in the best interests of consumers,” AFA CEO Richard Klipin said. “The AFA regards this legislation as a significant threat to small business advisers and the millions of clients they serve.”
Mr Klipin said that the inclusion in the Government’s EM of the Rice Warner research demonstrates that while aware of the impact of the legislation, the Minister has the audacity to pretend that it is a plan for growth for the financial advice industry.
“The FoFA Bill is part of a cleverly contrived plan to concentrate the control of Australian’s superannuation money in the hands of the union-controlled industry super funds for the benefit of the Labor Party,” he said.
AFA President, Brad Fox, said ordinary Australians will be the biggest losers of the legislation because they will have fewer options when it comes to choosing an adviser.
“Small business advice practices in the suburbs and in regional areas will struggle to survive, which means the only advice available to consumers will be that provided by large institutions and industry funds,” he said. “It is an appallingly retrograde step.”
Mr Fox said the AFA believes the legislation is all about political expediency. He said opt-in has been invented to hand control of the financial advice industry to the industry super fund movement and the introduction, without warning, of an additional obligation on advisers at this late stage further demonstrates the Government’s allegiance with industry funds.
“At an Industry Super Network function on 27 September, 2011, the Prime Minister addressed members of the audience as ‘comrades’ and openly thanked them. In her address, she said, “You stood with us to secure the iconic ‘opt-in’ policy…” Her statement reinforces our belief that opt-in is Government payback for ISN’s political support – nothing more, nothing less.”
At a political level, Mr Fox said the AFA will continue to expose the hidden agenda of the FoFA Bill and its anti-consumer elements with the Independents.
“Our question for the Independents is this: will they support their constituents, their communities, and the small businesses and consumers within them or will they buckle to a Government which openly favours one sector of an industry over another at the expense of the voting public it purports to serve? The FoFA Bill is not about what’s right, it’s about political expediency – the Government knows it and its survival depends on it,” he said.
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Julie Bennett, 64 Media
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