Change still all the rage through 2016

23-Dec-2016

By Sarah Kendell

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Regulatory change continued to dominate industry headlines in 2016, led by the government’s implementation of the most significant reforms to superannuation since 2007.

In the May budget, the coalition introduced sweeping changes to super tax concessions, including a reduction of annual concessional contributions caps to $25,000, a cap of $1.6 million on pension phase balances and a lifetime cap of $500,000 on non-concessional contributions.

The $500,000 lifetime cap was later softened to a reduction to $100,000 in annual non-concessional contributions following an industry outcry about the retrospective nature of the changes, which would have seen contributions dating back to 2007 included in the cap.

Following these amendments, and the return of the coalition government by the narrowest of margins in the July federal election, the legislation passed Parliament in November, with the associated regulations now open for industry consultation until February.

The government also amended its proposed legislation for adviser professional standards, announcing in April that existing advisers would not be required to complete a degree to comply with the standards that come into force on 1 January 2019.

Additionally, discussions around the life insurance framework reforms, which have yet to pass both houses of Parliament, continued over the year, with the Life Insurance Customer Group drawing enough support from the membership of the Association of Financial Advisers to call an extraordinary general meeting (EGM) with the aim of revoking the association’s support of the laws.

However, the resolution was resoundingly defeated at the EGM, held at the AFA’s National Adviser Conference in October, which saw the association retain its support for the legislation under the leadership of new national president Marc Bineham.

Leadership changes also occurred at the Association of Superannuation Funds of Australia, where long-serving chief executive Pauline Vamos stood down in July, with the looming election providing an opportune time for her to exit a position she had held since 2008.

Vamos’s replacement, former KPMG partner Martin Fahy, was announced in September and he has recently taken the reins at the association.

In terms of sale activity, there was plenty going on in 2016, with Macquarie announcing in March it would sell its life insurance business to Zurich. The transaction, which was completed in September, made Zurich the fourth largest retail life insurer in the Australian market. Macquarie cited onerous capital requirements as the reason for its exit.

ANZ also signalled a possible transition out of the advice market, first through announcing in February it would transition its Oasis platform to Macquarie ownership, and secondly by flagging last month that it would consider the sale of its overall wealth, advice and life insurance operations in Australia.

Additionally, National Australia Bank announced changes in its salaried advice business, NAB Financial Planning, in November. With 55 entry-level planner positions to go by early 2017, the headcount reduction would cut the group’s junior adviser footprint by more than half.

Finally, the spectre of the global financial crisis (GFC) and its associated failings continued to hang over the industry, with the government announcing it would not provide any further compensation to victims of one of the most high-profile collapsed fund managers, Trio Capital.

Internationally, the impact of the GFC and its aftermath were felt in the rise of political populism, which saw the success of the Brexit vote and the election of Donald Trump to the United States presidency, both of which continue to have destabilising effects on already volatile equities markets.

It’s been a huge year both locally and globally for political and regulatory change. With many key pieces of new legislation yet to come into effect, 2017 will no doubt bring its own share of surprises as the industry grapples with the impact of these.

On behalf of the team here at financialobserver, I’d like to wish you and your families a happy and safe festive break.

We will be back with our first issue of 2017 on 9 January.

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