A Senate Economics Committee report into legislation watering down Future of Financial Advice (FoFA) consumer protection laws suggests the changes will be brought forward without significant amendment.
Last night the Government controlled committee tabled its report into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 recommending it go ahead with only superficial change.
In the face of strenuous concerns raised by consumer and senior groups, academics and industry super funds, and at a time when the devastating impact of pre FOFA commission driven sales advice is still reverberating, the majority report of the committee has endorsed removing key consumer protections, including dilution or removal of the three pillars of FOFA:
* Diluting the ironclad best interest test by introducing loopholes lobbied for by banks;
* Allowing banks and other product providers to pay financial planners a range of incentives to sell their products, including super; and
* Allowing financial planners to be paid ongoing commission-like fees without providing ongoing advice by removing the opt-in.
Industry Super Australia (ISA) Chief Executive, David Whiteley, today said that Rice Warner estimates the removal of consumer protections will result in a staggering $7.5 billion cost to consumers over the next 14 years.
“The division evident between the majority and minority reports demonstrates the contentious nature of the wind back of FOFA consumer protections which the banks have been fiercely lobbying for.
“The Government must rule out seeking to pre-empt detailed debate of the Bill in the Senate by making regulations in advance of a vote.
“Debate of the Bill should be allowed to run its course in the Senate. Making regulations before the outcome in the Senate is known is a recipe for uncertainty for consumers and businesses alike,” Mr Whiteley concluded.