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.
Advisers would have far more wins if only they could join a militant union such as the CMFEU and have them back their cause for example…
Expecting the FAAA or AIOFP to get cut through is like going to war armed only with a pea shooter and a slingshot.
Peter Johnston deserves full support because he is the only industry representative who sees reality. Politicians will only listen if their reelection is on the line, whether through political donations or potentially losing public support. Groups like the Pharmacy Guild and the Minerals Council know how to play the game and it’s essential that we do as well.
The honest end up paying for the dishonest.
The dishonest sail off into the sunset.
I have been singing this song for years while watching the AFA and the FPA pussyfooting around when dealing with politicians. Politicians only respect one thing: electoral clout! And the standard of media reporting of this country means that no journalist is really prepared to sit down to drill down into the issue and discover the stupidity of CSLR, where the people who desired the financial products are never to blame when the excrement hits the air-conditioning object.
When will industry associations go to the Federal Court of Australia to take legal action against the selection bias and abuse of financial advisers and their Licensees caused by ASIC Supervisory Cost Recovery Levy (Collection) Act 2017 and CSLR Legislation? As I wrote in comments last week, this Legislation breaches Common Law in Procedural Justice and Distributive Fairness against financial advisers, who have done nothing wrong. My 2 AFSLs have never handled clients’ funds so why should we be compensating for wrong doers that handled clients’ fund, whether these wrong doers were licensed or unlicensed. Treasury’s IFM Final Report dated 23 June 2023 failed to do proper grounded research. Financial advisers have no fiduciary obligations for Commonwealth Budget repair and no fiduciary obligations for investors who lost money who were not out clients.
As another suggestion, FAAA, AIOFP, Stock Brokers Advisers Association could make the arrangement to speak out before the National Press Club. Then it should get the ear of the leading News Press Agencies, none of which have written up the Government impost of problems on financial advisers, who have done nothing wrong. Leading News Press Agencies only published the cases of wrong doers-bad news so the published weight appeared lop sided without voice in favour of good ethical advisers. FSC does not want to speak up, because their fund manager members do not want to pay ASIC’s $44.6 million 2022-23 investigations and enforcements costs.