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24 April 2014
The legal start date of the Future of Financial Advice (FOFA) reforms still remains at July 1 this year because the Federal Government failed to change it in Parliament.
On March 14, Financial Services Minister Bill Shorten announced in a media release the legal start date for FOFA would be July 1 2013.
When the bill was debated in the House of Representatives last week, Mr Shorten introduced a number of amendments but failed to include the revised start date.
As a result, the FOFA start date is still legally the same as defined in the original bill introduced in Parliament.
To change the date will require an amendment to be introduced into either house and approved by a majority of members.
The Coalition did try to change the date last week, with Shadow Treasurer Joe Hockey moving an amendment for FOFA to commence on July 1 next year.
“The minister has informally flagged for some time now that he will agree to a delay of the implementation,” Mr Hockey told the House of Representatives last week. “It is time he formalises it and gives certainty to the industry.”
Surprisingly, the amendment was defeated by five votes.
Minter Ellison Partner Richard Batten told insuranceNEWS.com.au the confusion over FOFA’s start date is “not useful and creates a number of issues”.
“As it stands, it will be a breach of the legislation to receive a payment after July 1 this year,” he said.
“People will have to manage the risks until the date is legally changed,” he said. “It puts people in an invidious position.”
Mr Batten says the problem also extends to “grandfathering” rights, which will legally cease on July 1 this year.
“It will create a lot of uncertainty as anti-avoidance regulations will also start from July 1,” he said. “The courts will only recognise the date in the legislation, so it is essential the date is changed through Parliament.”
The earliest the start date can now be amended is when Parliament resumes after the Easter recess on May 8.
A spokesman for Mr Shorten told insuranceNEWS.com.au his office is looking at amending the date legally, “possibly as early as when it goes to the Senate”.
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