The “urgent” issue of amending the grandfathering regulation could soon see it separated from the regulations that have just been frozen by the minister of finance.
Mark Rantall, the CEO of the Financial Planning Association (FPA), told Wealth Professional
that the grandfathering amendment needed urgent attention and the FPA would be pursuing it.
“The ramifications of putting on hold the regulation changes to go through parliament is that [grandfathering] got caught up in that,” he said. “We’ll be talking to Treasury about how we can go forward with that – it’s about fixing what we think was an anomaly at the time.”
The new face of FoFA, finance minister Mathias Cormann, announced on Monday that he had decided to put the implementation of the regulations on hold in light of the recent decision to refer the Streamlining of Future of Financial Advice Bill 2014 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.
The proposed amendment to grandfathering, which would broaden the circumstances under which conflicted remuneration can continued to be paid, is part of this package.
If passed it would mean that as long as the client maintains their interest in a financial product, the proposed amendment would allow advisers to move licensees and continue to access grandfathered benefits.
Currently any move after 1 July, 2013, causes this grandfathering to cease.
And while the FPA have been generally supportive of Cormann’s decision to put the regulations on hold to allow time for further consultation, they say financial services can’t afford to wait it out in regards to grandfathering.
FPA’s general manager of policy and government relations, Dante De Gori, told Wealth Professional
that the industry had already been damaged by the opposition’s grandfathering regulation.
“[It] has stagnated the market in respect to financial planners purchasing and selling businesses and moving licensees,” he said. “Unlike the other issues, the grandfathering one is stopping market competition in financial planning businesses – the industry is on hold.”
Grandfathering should be dealt with separately from the other regulations, he said.
The Association of Financial Advisers (AFA) agrees.
While recognising the need for a pause on the regulations, CEO Brad Fox said grandfathering musn't be overlooked.
"We do wish to emphasis the importance of a timely solution for the grandfathering issue that is currently preventing advisers from moving from one licensee to another," he said.