Is this election the most important in financial services history?

Financial advisers are bracing for a poll showdown between current PM Scott Morrison and PM hopeful Anthony Albanese as the two officially kick off their campaigns in the lead up to the 21 May vote.

The executive director of the Association of Independently Owned Financial Professionals (AIOFP) labeled May’s vote as the most important in financial services history.

“Do we stay with what we have experienced over the past 8 years or put our faith in a new ALP government? The sporting parlance is look at the score board and if you do not like what you see look at the other option,” Peter Johnston said in a written response to the ifa.

The Advisers Association CEO Neil Macdonald said regardless of who wins the election next month, the advice industry requires a “consumer-focused, bipartisan approach” following a great deal of change to compliance and regulation in recent years.

Speaking to the ifa, Mr Macdonald said the government must provide “better treatment” of Australian financial advisers so they can continue servicing clients and consumers, particularly now so more than ever with an estimated 250,000 people retiring every year.

“The financial advisers who remain in the profession are required to pass a demanding exam and meet more onerous higher education requirements. They are required to abide by a Code of Ethics and the Best Interests Duty. They are also dealing with the impact of the removal of grandfathered commissions and the move to annual advice agreements.

“Advisers and, importantly, their clients, need certainty that all this change is given the time it needs to settle in, without fear that more change is in the wind,” Mr Macdonald said.

“We would also hope that the reviews that are currently underway are concluded in a timely manner, that they address the improvements necessary and that issues are identified promptly and addressed in a cost-effective and efficient way.”

Mr Macdonald added that he hopes the incoming government will also look at the introduction of the Compensation Scheme of Last Resort (CSLR) legislation which was recommended to be passed by the Senate economic committee in February.

Mr Macdonald told ifa that he has serious concerns about the legislation which aims to provide limited compensation where a determination issued by the Australian Financial Complaints Authority (AFCA) that relates to a financial product or service remains unpaid.

“… we believe unfairly places yet another significant financial burden on the shoulders of financial advisers for very little consumer benefit, and we would hope that the incoming government takes the opportunity to pause and reflect on it.”

Meanwhile, the Association of Financial Advisers (AFA) CEO Phil Anderson predicted that any major changes for the industry, including the CSLR, will not be addressed until post-election.

“The government has now gone into caretaker mode, which means that outstanding legislation such as the Compensation Scheme of Last Resort, and other regulatory reform, such as the proposed change to the education standard, will need to wait until after the election to be resolved ,” he told the ifa.

“We are not expecting any major announcements on financial advice policy during the course of the election campaign, as we expect that both parties are going to rely upon the Quality of Advice Review [to be released in December] to drive the agenda for fixing the issues in financial advice and making financial advice more accessible and affordable.

“We look forward to Australia deciding on the new government and we will seek to work closely with whichever side of politics wins the election and forms government.”

Similarly, the FPA too is eager to work collaboratively with whoever forms government on the many issues that are important to their members.

“This election provides a great opportunity for financial planners to advocate for, and to evaluate the plans of the major parties for, a sustainable future for our profession,” Sarah Abood, CEO of the FPA, told the ifa.

“There are a number of challenges facing financial planning in Australia. We are dealing with multiple standards and regulations being applied on top of an already complex regulatory framework that has evolved over many years. It’s critical that any future government should prioritize and support the reviews already in train, that are assessing their impact on the long-term viability of the financial planning profession and making recommendations for change,” Ms Abood said.

The FPA confirmed it will soon be releasing the policy priorities it, in consultation with its members, believes must be addressed in the next term of government.

Is this election the most important in financial services history?

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Last Updated: 13 April 2022

Published: 13 April 2022

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