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178634
Thu, 04/28/2011 - 14:06
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https://oananews.org//node/178634
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Federal coalition may block super plans
SYDNEY (AAP) - The coalition has flagged it'll block key aspects of the federal government's planned financial advice industry clean-up, forcing Labor to rely on the Greens.
Assistant Treasurer Bill Shorten said reforms to the $1.3 trillion superannuation sector would encourage more Australians to seek financial advice and improve the 'cowboy' image of money planners.
The minister says the financial advice proposals will prevent another Storm Financial-style collapse.
But the coalition calls the claim ridiculous.
"For him to claim this will prevent future collapses like Trio, Westpoint and Storm is disingenuous," opposition assistant treasury spokesman Mathias Cormann told AAP on Thursday.
For this reason, the coalition will block a proposal to make investors renew their relationship with their financial adviser every two years, arguing a set opt-in period would cause smaller financial advisers to pass on higher costs to clients.
"It's an unnecessary regulatory burden. We think the government's gone too far," Senator Cormann said.
He cited Treasury evidence showing Labor's "opt-in" proposal would add $50,000 in extra costs every year for smaller financial advisers.
The Australian Greens previously have supported moves to reform the financial advice industry.
On Thursday, the minor party, which will hold the balance of power in the Senate from July, declined to declare a position on Labor's latest proposals.
"We will look at the details of what is actually to be delivered when legislation is presented to parliament," acting party leader Christine Milne told AAP.
The Financial Services Council, the lobby group for retail super and larger wealth funds, had initially wanted a three-year opt-in period.
It is pleased, however, that the government has settled on two years, rather than an annual renewal period as originally flagged by Mr Shorten's predecessor Chris Bowen in April 2010.
The council's chief executive John Brogden said he was concerned about a proposal to ban commissions on directly-advised life and risk insurance inside super, but not products outside super.
"It will distort the market and will likely see less insurance purchased, worsening Australia's under-insurance problem," he said.
The Industry Super Network, the lobby group for industry and union superannuation funds, had initially wanted an annual opt-in period for financial advice.
However, it remained a major supporter of Labor's reform plans.
"For the first time, financial planners will be required by law to act in the best interests of their clients," chief executive David Whiteley said.
From July 2013, up-front commissions would be banned.
"Soft dollar" payments of more than $300 to financial advisers would be outlawed from mid-2012, under a government plan to stamp out conflicts of interest.
The government also wants to ban volume payments, where there is a conflict between financial advice and super products.
Super fund managers will be able to continue paying rebates to superannuation funds under a system where fees are lower if more funds are managed.
The latest reforms to financial advice followed a 2009 parliamentary inquiry into the collapse of Storm Financial, which recommended a ban on financial advisers receiving commissions from financial products.
Assistant Treasurer Bill Shorten said reforms to the $1.3 trillion superannuation sector would encourage more Australians to seek financial advice and improve the 'cowboy' image of money planners.
The minister says the financial advice proposals will prevent another Storm Financial-style collapse.
But the coalition calls the claim ridiculous.
"For him to claim this will prevent future collapses like Trio, Westpoint and Storm is disingenuous," opposition assistant treasury spokesman Mathias Cormann told AAP on Thursday.
For this reason, the coalition will block a proposal to make investors renew their relationship with their financial adviser every two years, arguing a set opt-in period would cause smaller financial advisers to pass on higher costs to clients.
"It's an unnecessary regulatory burden. We think the government's gone too far," Senator Cormann said.
He cited Treasury evidence showing Labor's "opt-in" proposal would add $50,000 in extra costs every year for smaller financial advisers.
The Australian Greens previously have supported moves to reform the financial advice industry.
On Thursday, the minor party, which will hold the balance of power in the Senate from July, declined to declare a position on Labor's latest proposals.
"We will look at the details of what is actually to be delivered when legislation is presented to parliament," acting party leader Christine Milne told AAP.
The Financial Services Council, the lobby group for retail super and larger wealth funds, had initially wanted a three-year opt-in period.
It is pleased, however, that the government has settled on two years, rather than an annual renewal period as originally flagged by Mr Shorten's predecessor Chris Bowen in April 2010.
The council's chief executive John Brogden said he was concerned about a proposal to ban commissions on directly-advised life and risk insurance inside super, but not products outside super.
"It will distort the market and will likely see less insurance purchased, worsening Australia's under-insurance problem," he said.
The Industry Super Network, the lobby group for industry and union superannuation funds, had initially wanted an annual opt-in period for financial advice.
However, it remained a major supporter of Labor's reform plans.
"For the first time, financial planners will be required by law to act in the best interests of their clients," chief executive David Whiteley said.
From July 2013, up-front commissions would be banned.
"Soft dollar" payments of more than $300 to financial advisers would be outlawed from mid-2012, under a government plan to stamp out conflicts of interest.
The government also wants to ban volume payments, where there is a conflict between financial advice and super products.
Super fund managers will be able to continue paying rebates to superannuation funds under a system where fees are lower if more funds are managed.
The latest reforms to financial advice followed a 2009 parliamentary inquiry into the collapse of Storm Financial, which recommended a ban on financial advisers receiving commissions from financial products.
