01.FoFA windback draws more flack amid CBA revelations
Reaction to the Senate Economics Committee’s report on ASIC’s handling of the Commonwealth Bank financial planning scandal has come from many quarters, including victims of poor financial advice.
Recurring themes include a call to extend a Royal Commission on CBA to all banks; support for proposed new whistleblower protections and a renewed call to preserve the Future of Financial Advice (FoFA) reforms in their original form.
A citizens’ organisation founded in the aftermath of the Timbercorp liquidation, the Victoria-based Holt Norman Ashman Baker Action Group, issued a statement following the release of the report saying a Royal Commission should be expanded “to include all banks and financial institutions who have been involved in distribution of their products via financial advisers".
The group says it represents “around 40 ordinary people who sought accountancy services and or financial advice in order to take responsibility for funding our retirements”. Members “all face imminent bankruptcy or loss of their homes” due to the demise of Timbercorp, the group said.
The Construction Forestry Mining and Energy Union seconded the call to widen the investigation to all banks. “We need to know how many working Australians have lost savings because of financial advice that was not aimed at helping them in retirement, but at boosting sales commissions for advisers and profits for the banks,” national secretary Michael O’Connor said.
The government has rejected the idea of a Royal Commission focusing on the CBA scandal saying the current government inquiry into the financial services sector is enough. The Senate report covers misconduct at the bank between 2006 and 2010 and says CBA planners deliberately neglected their duties and placed their personal interests far above the interests of their clients. The wrongdoing has reportedly affected as many as 4000 CBA financial planning clients.
Better whistleblower protections
Independent Senator for South Australia Nick Xenophon
strongly backed the proposed new US style whistleblower protections outlined in the Senate report.
“For too long, too many potential whistle blowers have remained in the shadows, terrified of telling the truth and losing their job,” Mr Xenophon said.
“This Senate report is a massive breakthrough. There is now bi-partisan support to go down the US path that will, at last, ensure that whistleblowers are rewarded for doing the right thing by coming forward with key information in the public interest.”
The Senate report says “informed individuals need to be confident that they can report alleged misconduct, potentially unsafe products or dubious practices in Australia's corporate world and for their reports to be taken seriously and dealt with accordingly”.
It recommends widening whistleblower protections to cover any misconduct that ASIC investigates and strengthening whistleblower identity protections.
Don’t wind back FoFA
Industry Super Australia
, among others, said the findings of the Senate report “warrant an immediate halt to proposed changes to financial advice laws”.
“The government must assure all Australians they will not proceed with the windback of consumer protections in financial planning – changes that were lobbied for by the banks, including the Commonwealth Bank,” ISA chief executive David Whiteley said.