Senator CANAVAN: I said 'sectional', as in a section or a part."
But the Senate debate about a motion (subsequently passed) to disallow regulations approved by the Australian government in July that dilute the Future of Financial Advice (FOFA) legislation is more than a collection of smutty punchlines.
FOFA is a serious law, introduced by the previous Labor government after a series of scandals hit Australia's financial planning industry. Amongst other items, FOFA outlawed commissions on investment products and set higher standards of fee disclosure for advisers.
The July FOFA modifications - approved after a deal brokered between the new Coalition government, PUP (headed by mining magnate and Titanic dreamer, Clive Palmer) and the Motoring Enthusiast Party - removed the controversial requirement for clients to 'opt-in' to receive services from their financial adviser every two years and eased the restrictions on offering commissions for so-called 'general advice'.
A disobedient PUP senator and a u-turn by the Motoring Enthusiast reinstated the original, tougher FOFA rules last week, causing the financial advisory industry to flip-out about the flip-flop.
Aside from an insight into the humourous workings of Australian government, the FOFA senate debate reflects the deep, politically-defined divide in the country's financial industry: it's a tale of two stooges.
Labor, as Coalition senators repeatedly argue, is pushing the agenda of the powerful, union-controlled industry fund sector; the government, Labor and its sidekicks argue, is sucking up to the 'big end of town'.
The industry fund v big end battle doesn't resonate much in New Zealand, where there is almost zero union-based influence on financial advice or investment matters.
However, the broader arguments raised in the senate debate about the future of financial advice, the role of commissions and the general distrust of the advisory industry would play just as well here.
As legal firm Chapman Tripp notes in a recent document, the government here should look to the Australian FOFA debate to guide the upcoming review of the NZ Financial Advisers Act.
"We strongly urge MBIE [Ministry of Business, Innovation and Employment] to use the review to look at the FOFA process as there may be some significant policy learnings relevant to the New Zealand environment," Chapman Tripp says with a straight face.
