Reforms designed to restore confidence in the financial services sector are at risk of being derailed following intense lobbying from a powerful group of planner networks and industry associations.

At least one key independent MP does not support aspects of the Future of Financial Advice (FOFA) reforms and another is wavering following a well-orchestrated campaign targeting MPs in marginal electorates.

Independent MP Rob Oakeshott was the first to capitulate to the pressure in a statement to Eureka Report: “The opt-in arrangement … is a problem for many smaller financial businesses in regional Australia … I am considering amending this to at least five-year service agreements and would be interested to see if the Coalition wishes to go further.”

Greens MP Adam Bandt has similar concerns: “The Greens support the general direction of the government’s package … (but) we will be looking closely at the opt-in arrangements.”

The opt-in arrangement is central to the government’s reforms. It would require investors to opt-in as an adviser’s client every two years. It would eliminate the possibility of advisers collecting fees from clients in periods where no advice was given nor action taken.

The original recommendation was for opt-in service agreements to take place every 12 months but was raised to two years in a concession designed to appease the industry.

Having successfully influenced government policy, the industry has turned its attention to the opposition, which last week announced it would repeal the opt-in service requirements and the banning of commissions on life insurance bought inside superannuation.

The opposition spokesman on financial services and superannuation, Senator Mathius Cormann, said in a statement: “Labor’s push to force people to keep re-signing contracts with their financial advisers on a regular basis is bad public policy.”

That arguably the most important reforms in the sector’s history now stand to be blocked is a devastating blow for Eureka Report’s 20,000-plus readers and the one million self-managed super fund trustees who are weary of a system riddled with conflicts and have voted with their feet.

When Oakeshott’s views were relayed to the office of Bill Shorten, whose portfolio covers superannuation, a spokesman said: “The government respects Mr Oakeshott’s views and we will continue to discuss this issue with him …  it comes as no surprise that the financial planning industry is lobbying hard … (but) the government is convinced that two years opt-in is a fair and equitable timeframe.”

While lobbying normally takes place behind closed doors, Eureka Report has paid special attention to this process and how it has unfolded.

Among the first in line to publicly denounce the reforms was the $14 billion financial services giant AMP. With a network of more than 4000 financial planners across Australia and New Zealand, following its acquisition of AXA Asia-Pacific in March, it’s no surprise that they were at the forefront of the debate.

In an interview with industry publication Professional Planner soon after the reforms were released, AMP’s managing director of financial services, Craig Meller, laid out the house view.

“When you look holistically at the reforms that are coming through within FOFA, we don’t believe that [opt-in] is something that’s necessary,” he said. “Our recommendation would be that it’s not something that we think is going to play any part in solving the issue that the government set out to achieve.”

The same view, perhaps less eloquently expressed, is shared by many other dealer groups, which have complained to the media of the “red tape” and “administrative overkill” of this seemingly innocuous requirement to get clients to sign a document every two years.

Their anger at potentially being cut off from such a lucrative source of revenue has been palpable and was expertly harnessed by the Association of Financial Advisers. The Association of Financial Advisers is small, at 1300 members, but powerful on account of the 400,000 people its membership base employs in practices across Australia.

At the beginning of May they rallied the troops by distributing a “Political Engagement Pack”, which identifies marginal seats and encourages financial advisers in those electorates to lobby their local member with “key talking points” designed to sway them against the reforms.

The pack includes the names, parliamentary phone numbers and email addresses of all of the independents and any MP who would be tipped out of their seat by a swing of less than 6%.

The document also includes helpful hints for advisers prepared to meet their MP in person, such as “Be on time” and “Stay on message”. In a subtle reference to the size and reach of the association it also suggests advisers explain how FOFA will impact their “number of staff”.

For now, the remaining independents and unaffiliated members of parliament who are crucial to Labour’s minority government are undecided. According to Andrew Wilkie, the independent member for Denison: “These are complex reforms and I’m yet to decide my position.”

Bob Katter, the independent member for Kennedy, said: “We have to consider the implications of this particular piece of legislation and are awaiting debate in the house.” Independent MP Tony Windsor and WA Nationals MP Tony Crook were contacted for this report but unable to comment.

But with Oakeshott’s decision to side with the Liberal Party on opt-in, and Bandt wavering on the issue, the possibility of recommendations being sidelined, or at worst shelved entirely, simply can’t be ignored.

*This article first appeared on Eureka Report.