01.Government changes to remain
In a major blow for consumers, government reforms axing important consumer protections have passed in the Senate.
The changes to the Future of Financial Advice laws, or FoFA, severely weaken the protection for consumers when receiving financial advice. The FoFA reforms were only won after a number of high-profile scandals such as Storm Financial and Opes Prime saw consumers lose $5.7bn.
CHOICE has been campaigning against the changes, which water down the duty of financial advisers to act in the best interests of their clients, and remove the requirement for advisers to obtain the agreement of customers in order to keep charging fees.
More than 11,000 Australian consumers signed CHOICE’s petition opposing the government’s changes. CHOICE took these concerns to Canberra, and met with politicians from all parties. Despite these efforts, the government won a crucial vote to proceed with its wind-back of these important consumer protections.
Because the government used regulations to make its changes, they could have been stopped in the Senate.
With Labor, the Greens, Senator Nick Xenophon and Senator John Madigan all opposing the reforms, the government needed the support of the Palmer United Party to get the changes through.
In June, Clive Palmer, the leader of the Palmer United Party, indicated that he would not support the government, telling AFR Weekend that if the changes were to go to a vote in the Senate “we’ll get rid of it. The men and women of Australia – the pensioners and working classes – should be allowed to rely on the advice they’re given”.
However, Mr Palmer changed his mind after reaching a deal with Finance Minister Mathias Cormann. In it, the Palmer United Party agreed to support the government if they agreed to make key changes to the regulations.
Disappointed: CHOICE CEO Alan Kirkland
But CHOICE believes the additional changes will do nothing to prevent the roll-back of key consumer protections and is disappointed in the vote to uphold the federal government’s wind-back of FoFA.
"The big banks, the heads of the major investment houses, the financial planning industry, will be doing cartwheels in the street because of this deal," said CHOICE CEO Alan Kirkland.
"Because this deal delivers for industry, it delivers for the big end of town and that is at the expense of consumer protection."
The fight for FoFA continues
CHOICE will keep working to improve the rights and protections for consumers when receiving financial advice.
The original FoFA reforms were hard-won, but they can be won again. You can join the fight by signing up
as a campaign supporter today!