What can the Financial Services Sector Expect from the New Federal Government?
"Son of Wallis" Inquiry
The incoming Coalition government has committed to conducting a comprehensive "root and branch" inquiry into the banking and financial services sector regulatory framework. That inquiry will be completed within the first term of government with implementation of any recommendations likely to be a second term priority. A consultation draft of the terms of reference should be available shortly if the Coalition meets its commitment to release this within its first 100 days in office.
Until the review is completed, the Coalition has committed to a moratorium on further significant regulation in the financial sector.
Future of Financial Advice (FOFA) Amendments
The Coalition has committed to implementing all the recommendations that it made in response to the 2012 Parliamentary Joint Committee inquiry into FOFA. These recommended changes include:
complete removal of opt-in requirements
annual fee disclosure obligations on financial service providers will be reduced
providing greater certainty in relation to the best interests duty
providing greater certainty around the provision and availability of scaled advice
reversing the government's ban on risk insurance within superannuation
reform of conflicted remuneration rules.
Superannuation Fund Reforms
The Coalition has consistently said that it will introduce reforms to the Fair Work Act so that default superannuation provisions in awards are open to more competition amongst superannuation funds.
In addition, the Coalition is keen to review the governance arrangements for superannuation fund trustee boards and move away from the equal representation model, adopted by many industry funds, which sees half the board come from member/union representatives and half from employer representatives. This review will examine the efficacy of appointing independent directors to trustee boards.
The Coalition has also announced that it will defer for two years (to 2021) the stepped increases in compulsory employer contributions from nine to 12 per cent.
Easing Red Tape Burden on Small Business – Superannuation
The Coalition will introduce a framework allowing small businesses the option to remit compulsory superannuation payments on behalf of employees directly to the ATO in an effort to ease the compliance burden for small business. The clearing house is currently managed by the Department of Human Services.
No Stated Positions on Further Privacy and Credit Reforms
The new government does not currently have a publicly stated position in relation to:
mandatory data breach notification reforms that were close to being enacted in the last sitting of Parliament, or
further reforms relating to consumer credit such as proposed reforms to investment lending.
Reforms of the Previous Government
The Coalition has maintained a position that it will reverse Labor's controversial changes to fringe benefit tax and is likely to do so. However, Labor's planned Financial Stability Fund that will be funded by a levy set at 0.05 per cent on deposits of up to AUD250,000 remains intact and will commence on 1 January 2016.