The government's move to extend the ban on conflicted remuneration to listed investment companies and trusts is expected to provide financial advisers with some much needed certainty.
Following Treasury consultation, the government made the decision to extend the ban on conflicted remuneration to listed investment companies and trusts yesterday, in a move which should ensure a saloon passage through the Senate for legislation extending the deadline for advisers to meet FASEA educational requirements.
With the matter settled, a Labor spokesperson told Financial Standard the opposition's amendment to the Treasury Laws Amendment (2019 Measures No. 3) bill is no longer required.
Shadow Assistant Treasurer and Shadow Minister for Financial Services Stephen Jones questioned the government's decision to remove the exemption a week after Labor's amendment was due to be given airtime in the Senate.
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Jones said pressure has been mounting on the government to make the call since Labor introduced the amendments in the House of Representatives in February.
"As recently as last week, Senator Jane Hume made the inexplicable last-minute decision to de-list a Treasury amendment bill to avoid a vote on removing this loophole," Jones said.
"The bill in question contained a vital fix for the government's embarrassing failure to manage the FASEA reforms for financial advisers. Senator Hume needs to explain to confused financial advisers why she chose to delay this legislation, given that the government would agree to Labor's position mere days later.
"While we give credit to the Treasurer for finally acting, both industry and consumers would have been spared uncertainty if this common-sense decision could have been made far earlier."
Senator Hume saw it differently though, and called on Jones to "stop playing games", and allow the FASEA extension bill to pass as non-controversial business in the next sitting.
"Labor must now enable the bill for the FASEA education extension to return to non-controversial business, as it was listed before last Monday," she said.
"At a time like this, people need financial advice and financial advisers need certainty.
"Labor conflated two unrelated issues, using the FASEA bill as a cynical political ploy at the expense of the industry and Australians who need essential financial advice."
Peak bodies representing different interests offered a mix of responses to the government's decision yesterday. The Financial Planning Association of Australia was pleased, and called on the Senate to "urgently" turn its attention to the FASEA extension bill.
"We welcome the exemption as it ensures Australians continue to invest with confidence in LICs and LITs," FPA chief executive Dante De Gori said.
"Today's announcement also removes any impediment to passing the much-needed Treasury Laws Amendment (2019 Measures No.3) Bill 2019, which will grant financial planners an extension to complete new education requirements.
"Our members are calling on the Senate to pass the bill at the next parliamentary sitting on 10 June."
The Financial Services Council welcomed the decision on Twitter, and said it would "help promote quality financial advice".
The Listed Investment Companies and Trusts Association seemed less enthusiastic, and noted the decision before commenting that the industry would now "consider the adjustments required to ensure a smooth transition to the new law", to ensure the quality and integrity of the capital raising process for closed ended listed investment vehicles was not interrupted.
"In formulating the amended legislation, we would hope that the government ensures that the other service provider costs of preparing for a capital raising including arranger/manager fees are not inadvertently and improperly prohibited," LICAT said.