A Federal Treasury official has admitted that no modelling has been undertaken on the implementation costs of the Future of Financial Advice (FOFA) reforms.
Speaking at the Senate Economic Legislation Committee, Treasury Markets Group Executive Director Jim Murphy said no “comprehensive modelling of the recommendations” of FOFA had been undertaken.
“We have received advice from various interest groups and from various representatives of the industry on aspects of modelling, but there has been no comprehensive modelling of the recommendations,” Mr Murphy told the committee.
He was responding to questions from the Shadow Assistant Treasurer Mathias Cormann about the financial impact of the legislation.
Asked if a regulatory impact statement had been undertaken, Mr Murphy said it had been completed and there was feedback from the Office of Best Practice Regulation.
“We were found to be in breach of the requirements,” he said.
Senator Cormann says this finding also applied to the controversial “opt-in” proposal for FOFA, which the office had deemed as being “non-compliant” with best practice regulation requirements.
Financial Planning Association CEO Mark Rantall says the Treasury admission that FOFA legislation was in breach vindicates the industry’s opposition to the opt-in proposals.
“This frank admission by Treasury vindicates our recent criticism of the rushed alterations made to the final draft FOFA legislation,” he said.
“These were critical changes ushered into an important draft with no consultation and zero consideration for the harsh impacts on financial planners and their clients.”
Speaking outside the committee meeting, Senator Cormann said Financial Services Minister Bill Shorten’s approach to FOFA has been “erratic”, with proposals changed or dropped during the extensive consultation period.
“Minister Shorten’s zig-zag approach on FOFA is creating unnecessary uncertainty for financial advisers and consumers,” he said.
“We’ve had the proposal from Mr Shorten in April to ban commissions on all life insurance inside super, only to see him back down – sensibly – in August. We’ve also had the ‘best interest’ duty in and th
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