AIOFP calls for strategic action on CSLR beyond media anger

Last week in a webinar, the Financial Advice Association Australia (FAAA) argued strongly against the implementation of the Compensation Scheme of Last Resort (CSLR), calling the process “very poor and disappointing”. Phil Anderson, the general manager of policy advocacy and standards, expressed strong frustration, stating: “We are really angry about how this has all landed.”

Now, responding to the FAAA, the Association of Independent Financial Professionals (AIOFP) has issued a statement noting that expressing anger alone will not sway politicians, who might misinterpret advisers’ intentions, rather, advisers should concentrate on engaging clients to comprehend the political dynamics of advice costs and lobby local federal politicians accordingly.

“We agree with the FAAA about the CSLR outcome BUT the question is, what can we do about it? Being ‘really angry’ in the media means nothing to politicians, they will spin it that ‘Advisers want to take away a consumer protection mechanism that they are responsible for’,” said Peter Johnston, the executive director of the AIOFP.

“This is, of course, totally erroneous, but CSLR has been recently legislated and we must implement some specific political strategies to have any chance of amending it,” he continued.

Deeming the CSLR a “sacred cow” of consumer protection, Johnston said it poses challenges for advisers, prompting calls for strategic action.

“Canberra bureaucrats will not touch it – only highly pressured politicians will. We have been reporting on the potential CSLR negative ramifications for our industry over the past four years, it is a classic case of politicians only implementing specific aspects of the Hayne recommendations that suits their agenda.

“Ever since commissioner Hayne recommended CSLR should commence retrospectively from January 1st 2008 capturing all of the institutions $30-plus billion of failed funds, it was politically doomed. Both sides of politics pledged to implement the original specifications whilst in opposition but acquiesced when in power.”

As such, Johnston said the advice community has some 12 months to position itself to intimidate both sides of politics with “votes and cash”.

He highlighted key strategies, including engaging clients on the political nuances of advice costs through lobbying their local federal politicians, raising capital for strategic donations, and leveraging influence in marginal seats to prioritise self-interest during critical political decisions.

“The AIOFP chose this path at the last election with some success, we can do it again. Fence sitting associations get shot from both sides, we need to make a meaningful stand and the greater numbers involved, the greater chance we have of success,” Johnston said.

This is not the first time the AIOFP has called on advisers to unite and yield pressure on politicians. Earlier this month, Johnston urged advisers to take advantage of politicians wanting votes.