01.What will FoFA changes mean for you?
Update: CHOICE will be presenting at a public hearing as part of a Senate Committee Inquiry into the wind back of Future of Financial Advice (FoFA) legislation. You can watch our presentation to the Senate Economics Legislation Committee from 9.30am on Thursday 22 May on the Australian Parliament House website.
You might not know it, but your consumer protections are about to be watered down.
In a submission to the Senate Committee on Economics, CHOICE and a coalition of consumer groups have recommended that legislation diluting financial advice protections should be abandoned as it will expose consumers to unnecessary financial risk.
In 2012, new protections were introduced to make sure that financial advisers had to act in your best interests. These protections were known as the Future of Financial Advice, or FoFA, reforms. Now the government is introducing laws that will wind back essential consumer protections.
What will the changes mean for you?
CHOICE has produced an infographic to help people understand the impact of these proposed laws.
When the wind back of consumer protections is explained, it is clear it will hurt consumers. CHOICE’s nationally representative research found 81% of consumers were concerned that bank tellers would be able to sell complex financial products like superannuation without assessing customers’ personal needs and that they would earn a commission for doing so.
CHOICE CEO Alan Kirkland says, “It’s important to remember that FoFA was introduced last year to clean up the financial advice industry and these protections have barely been implemented before this move to water them down.”
A growing number of Australians need financial advice they can trust. Currently Australians have $1.62 trillion in superannuation assets and 38% of people directly own shares.
“A growing number of Australians will rely on superannuation savings to retire, underlining the need for quality, trusted financial advice. It makes no sense for the Government to wind back financial advice protections in this climate,” says Kirkland.
Read CHOICE’s submission on the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 and the letter to Senate Committee from consumer advocacy organisations.