Finance minister freezes FoFA regulations

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He only took over from his predecessor a week ago, but Mathias Cormann is already making waves in the FoFA world and has just announced he has frozen the planned tabling of the regulations.

In a statement on his Parliamentary website yesterday, Cormann said he 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.

But Cormann isn’t concerned.

“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.”

The decision has been welcomed by a variety of stakeholders, including the Financial Planning Association (FPA.)

CEO Mark Rantall told Wealth Professional that he was pleased there will be more time to investigate changes that would otherwise have been introduced as regulatory reforms this week.

“We think it gives time for all the stakeholders to regroup and discuss the matter, and for Mathias to consult with the industry," he said. "We're very supportive of Mathias Cormann – he was the original architect of these reforms and we welcome his involvement."

Rantall said the freeze will likely give Cormann the time he needs to assess and discuss the situation, which has seen him suddenly become the face of the FoFA reforms after the resignation of Assistant Treasurer Senator Arthur Sinodinos.

"I think it's a logical move from that perspective, and anyone would think it's the sensible thing to do," he said.

Industry Super Australia also released statements of support for the pause on the regulations.

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 past week has proved tumultuous for the coalition’s FoFA reforms.

Predictions that the already drawn out process would be stretched even further came after the ex-face of FoFA Senator Sinodinos announced he was stepping down after being named in a major corruption case.

A couple of days later, on March 20, the senate referred the Streamlining of Future of Financial Advice Bill 2014 to the senate economics and legislation committee for inquiry and report.

At the time business analyst Max Franchitto told Wealth Professional the process was not going to wrap up anytime soon.

"For me it's another reason for everything to be delayed. There will be more consultation with individuals and people will see this as an opportunity to try and convince the new minister to do differently," he said.

The associate professor and head of the school of banking and finance at the University of New South Wales also previously told Wealth Professional that he believed the FoFA amendments should be frozen until after the currently ongoing Murray inquiry is completed.

"Everything is happening at the same time and I would argue at a policy level that policy makers should take a broad overview. You can’t look at these changes in isolation – this is a big concern," said Jerry Parwada. "Why not freeze the changes until someone looks at the implications of what’s happening in this industry."

The Abbott government had planned to introduce the now paused regulations this Friday, after Parliament rose for a six-week break, the Sydney Morning Herald reported.

The timing would have made it impossible for the Parliament to immediately disallow the regulations.


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