01.Protections to go
Today, the federal government announced it will remove critical consumer protections known as the Future of Financial Advice, or FoFA, reforms.
It has said that the bulk of the wind-back will be made via regulations to take effect from 1 July 2014.
The government claims that the ban on commissions for financial advice will remain, however ‘incentive payments’ will now be a possibility. This includes ‘bonuses’ paid to advisers or bank staff for recommending one product over another.
The government is also proposing to remove the requirement that clients ‘opt in’ to fees charged by financial advisers. This means that many hidden fees removed by FoFA will be brought back.
One of the biggest problems in the investment industry has been that of clients being charged fees, for years after the adviser has stopped providing advice. The requirement that clients consent to these fees every two years is an important way to make sure that investment income is not eroded by fees.
The FoFA reforms were only won after a number of high-profile scandals saw consumers lose hundreds of millions of dollars.
CHOICE is calling on federal politicians to oppose all legislation and regulation that will wind back essential protections for consumers seeking financial advice.
You can join the campaign by signing our petition