Financial planners are free to flout parts of the new Future of Financial Advice Act while the Coalition prepares to dismantle them.
The admission from the Australian Securities and Investments Commission at a Senate hearing on Wednesday gives planners a green light not to present to clients the annual statements regarding ongoing fee arrangements entered into before July 1, 2013, required under section 962S of the Corporations Act.
ASIC deputy chair Peter Kell said the commission had taken the decision to ”avoid uncertainty” while the government prepared to remove the provision.
However, the repeal of the rules is uncertain because Labor and the Greens, who hold the balance of power in the Senate until July, have vowed to block the move.
”There is no value at this point in time, no value for the industry, in going out and initiating enforcement action in relation to matters that are currently being considered before the Parliament,” Mr Kell told Labor senator Sam Dastyari.
Assistant treasurer Arthur Sinodinos announced plans to wind back parts of the reforms on December 20. The changes will not be enacted until regulations are introduced backed up by legislation after the Senate changes hands in July.
Senator Dastyari asked ASIC chairman Greg Medcraft why he was proposing not to apply a law which had been in place since July.
Mr Medcraft said ASIC had already announced a decision to adopt ”a facilitative approach to compliance with the law in the first 12 months”.
”Basically again you could argue the same way, that we did not strictly enforce the law in that first period to allow industry to adapt to the law,” he said. ”So it is not dissimilar.”
Mr Medcraft said if he saw a ”major breach” he would enforce it.
Senator Sinodinos said the situation was little different to that faced by businesses wondering how to react to the tax measures announced by Labor but not enacted by the time it lost office.
”When with a law like this which has only been in effect for 12 months and a new government comes along which has clearly signalled an intent to amend the law … what ASIC has done is try to provide some certainty to people, and I think in that sense it is a reasonable thing to do,” he said.
The regulation would ”come into place when the government signs them,” which could be ”earlier than May”.