Unless regulatory guidance on the impact of FOFA on corporate superannuation specialists is released by the government today, this sector of the advice industry is under serious threat, the Association of Financial Advisers has warned.
AFA chief executive Brad Fox said the potential compliance trap corporate super advisers may find themselves in Monday is an example of why the reforms should be postponed, as pressure mounted from industry and the Coalition yesterday for a 12-month FOFA extension.
“We think some form of extension is necessary and the reason is that there are so many things still unknown,” Mr Fox said.
“The context is that government, ASIC, Treasury and the industry have all underestimated the challenge to be ready by Monday.
“It’s not through lack of resources at industry level – we still don’t have grandfathering regulations or corporate super guidance; this is a sector of the industry that has had the door shut.”
Under FOFA, a conflict arises for advisers specialising in corporate super where a practitioner undertakes a super fund selection tender and provides ongoing services paid for by the super fund. The traditional remuneration model of corporate super advisers is considered conflicted under the new regime.
Corporate Super Specialist Alliance president Douglas Latto told ifa that if regulations are not forthcoming from Treasury today or over the weekend, his members may be found non-compliant and may have to exit the industry altogether.
“This would leave a large gap in the market with no obvious alternative,” he said.
While hopeful of guidance from regulatory authorities, Mr Latto conceded that the lenghty period of silence on the matter and the events in Canberra over the past week may make the prospect less likely.
Shadow minister for financial services and superannuation Mathias Cormann joined his voice to the chorus of those calling for a FOFA extension yesterday.
"The implementation of FOFA and Stronger Super clearly should be extended by 12 months,” the senator said.
"The government's disjointed and chaotic handling of complex FOFA and Stronger Super legislation means that financial services businesses across Australia will not be in a position to comply from next Monday.
"It is highly undesirable to have large numbers of financial services providers forced into a situation where they have no chance but to be non-compliant.”
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