19 November 2014
CHOICE applauds Senators who have announced they will repeal regulations that removed essential protections for consumers seeking financial advice.
“Earlier in the year the Government used regulations to remove critical consumer protection that were originally introduced as part of the Future of Financial Advice, or FoFA, reforms. Today, Senators have fought back for consumers,” says CHOICE CEO Alan Kirkland.
“The July FoFA regulations delivered everything that big four banks and financial advice industry wanted, and exposed consumers to significant risk.”
Today, Senator Nick Xenophon supported by a majority of Senators, including Senators Madigan, Lambie and Muir, introduced a motion to disallow the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014. The regulation took effect on 1 July 2014 but it can be repealed if the disallowance motion is supported by a majority of Senators.
“We have seen scandal after scandal where financial advisers have taken advantage of their clients from Storm Financial to Timbercorp to Commonwealth Financial Planning,” Mr Kirkland says.
“CHOICE has consistently called for parliament to do everything they can to stop this happening again, by protecting consumers from harmful and duplicitous financial advice practices.”
CHOICE says that if the regulation is disallowed, consumers will be able to feel more confident that they are getting impartial financial advice they can trust.
If this disallowance motion passes, consumers will notice practical benefits:
- Financial advisers will have a clear and strong obligation to act in a client’s best interests.
- The advice received will not be clouded by financial incentives that reward advisers based on how much of a particular product they sell.
- Advisers will be required to disclose the fees on a regular basis and will have to make contact with their clients from time to time, to make sure they are happy to keep paying fees.
“We applaud the stand of Senators who have decided to put the interests of consumers ahead of the interests of big business,” Mr Kirkland says.
The Future of Financial Advice reforms were introduced in 2012 following extensive consultation with industry, government and consumer groups.
Earlier in the year the Acting Assistant Treasurer Mathias Cormann released the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 which removed essential consumer protections from 1 July 2014.
CHOICE has strongly opposed all changes to the FoFA protections. For more information see CHOICE’s submission to the recent Senate Committee Inquiry examining these reforms: https://www.choice.com.au/consumer-advocacy/campaigns/financial-advice