A few reminders...
Financial advice laws set to be watered down - FOFA law change rebellion lauded by financial advice victims
19 November 2014
Yolanda Redrup
Victims of dodgy financial planners have strongly backed the crossbench rebellion that will undo the Coalition government changes to consumer protection laws.
But the victims say even if the the push is successful, power will still sit firmly in the hands of the financial planners.
Merilyn Swan, whose parents were victims of rogue Commonwealth Bank financial planner Don Nguyen, said the bar for the moral financial planners to pass was "so low a caterpillar could crawl underneath it".
"The bar for clients to climb over to get something done is Mount Everest, but for financial planners it's on the ground. There is a disparaging gap," she said.
"I do hope these changes are stopped ... it's a tiny step, but we need some mighty leaps."
The decision by Jacqui Lambie and Ricky Muir to side with the Labor Party allowed the Opposition to get enough numbers in the Senate to move a disallowance motion on the Coalition's changes to the Future of Financial Advice (FOFA) laws.
The decision of the Liberal Party to water down the original FOFA reforms has caused Ms Swan and her father, a lifetime Liberal supporter, to change their vote.
"My father is 89, he's always voted Liberal and he's said never again," she said.
Another victim, Naomi Halpern, knows all too well what can happen when shoddy financial advice is permitted.
"I was seeing a Melbourne-based accountant for my business tax and personal tax for six years when he started to give me financial advice and he advised me that investing in schemes like Timbercorp were superior alternatives to superannuation," she told BusinessDay.
"He took advantage of me. I asked him many questions, but he knew I wasn't financially sophisticated."
Ms Halpern said she did not realise she had been given poor advice until "everything fell apart at the seams".
"With my particular situation, my accountant was highly incentivised to be putting me in these products because he was getting enormous commissions," she said.
"If financial planners, whether they're independent or working in banks, get commissions or bonuses for certain products, it motivates them to sell these products."
Ms Halpern also said more changes needed to be made, but believed the decision of Ms Lambie, Mr Muir and the Greens to back Labor's disallowance motion protected people in the future from being caught by crooked financial advisers.
"I don't want anyone to have to go through this torture," she said.
Council for the Ageing chief executive Ian Yates also spoke out on Wednesday against the Coalition's changes to the financial advice regulations.
"On behalf of older Australians who have been very concerned about the need for independent, comprehensive financial advice, I would congratulate the senators who have just issued this statement," he said.
"We need an independent financial advice service in Australia ... but the bedrock has to be full accountability for the best interests of the consumers, no compromise, no way to get out of that."
Financial advice laws set to be watered down
Georgia Wilkins
17 June 2014
Laws designed to protect consumers from poor or biased financial advice look set to be watered down after a Senate committee gave the green light to changes.
The committee has supported the government's controversial changes to water down parts of the future of financial advice (FoFA) laws, recommending a bill be passed with minor amendments.
The bill, proposed by former assistant treasurer Arthur Sinodinos, addresses what the Coalition calls ''unnecessary red tape'' arising from the original Labor reforms, designed to safeguard consumers against bad or conflicted financial advice.
It removes an ''opt-in'' clause requiring clients to review their fee arrangement with their advisor every two years, changes best interest requirements and excludes general advice from conflicted remuneration rules
In a report tabled in the Senate last night, the committee supported the bill with recommendations for two minor amendments.
It said it believed there would be no dilution to best interest duties under the changes, and that the bill would create a ''greater deal of certainty for both client and advisor''.
It said it believed that the current law needed to be changed to ''remove necessary complications'' associated with the provision of general advice.
''The bill's intention is to enable a business, under certain circumstances, to give general advice to retail clients on its own products,'' it said.
Labor and Greens senators have opposed the bill, with Labor calling the committee's amendments ''little more than a piecemeal attempt to fix structural legislative gaps and failures''.
''The proposed Government changes are not minor or technical in nature but rather a complete undermining of the core principles of best interests duty, consumer protection and lifting the standards to a professional level.
''Labor members of the committee believe that the bill in its current form is beyond repair and should be opposed. Furthermore, the Government should abandon any attempts to rush in, again, a new set of regulations that in effect gut the FOFA reforms ahead of introducing new legislative charges.
Industry Super Australia said the report went against strenuous concerns raised by consumer and senior groups, and paved the way for banks to pay their financial planners a range of incentives to sell their products, including super.
"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,'' ISA chief executive David Whiteley said.
The committee recommended amendments to the bill to spell out the best interests obligations and make it clear that it was not in the government's intention to re-introduce commissions for financial advice.
Assistant Treasurer Arthur Sinodinos announces changes to Labor's Future of Financial Advice reforms
Peter Ryan and Rebecca Hyam
20 December 2013
The Federal Government is planning a major shakeup of the Future of Financial Advice rules introduced by Labor.
Many of the changes would overturn reforms introduced in the wake of the Storm Financial collapse, in which some investors lost their life savings because of conflicted financial advice.
One of the proposed changes would water down a key provision to obliges financial advisors to always act in the best interests of their clients.
The Assistant Treasurer Arthur Sinodinos says that is just one area where Labor's reforms went too far.
"Having a catch-all creates uncertainty, certainly in the minds of advisors, about whether they've done everything they can in the provision of advice," he said.
"When you create that uncertainty, you don't know how that will distort the behaviour and you don't know whether that actually inhibits advisors from giving the best possible advice because they become particularly risk-averse."
The Government also wants to remove the "opt-in" requirement, which forces financial advisors to contact fee-paying clients every two years to renew their contacts.
It would also scrap rules requiring financial advisors to disclose how much they charge clients in annual fees.
Senator Sinodinos says the reforms will save $90 million in implementation costs and cut compliance burdens by $190 million per year.
While admitting the overhaul will be challenging, he says consumers will be better protected.
"Nobody can ever guarantee in all circumstances that there will never be another financial collapse of any kind, or that advisors will in all circumstances give good advice," he said.
"But what we need to do is have a system that maximises to prospects of good advice at an affordable price."
The group representing industry superannuation funds is worried the changes will allow financial planners to once again receive sales commissions, paid for by banks and private super funds.
Industry Super Australia executive manager David Whitely says he particularly concerned about provision requiring advisor's to act the best interest of clients.
"We're very concerned that changes to the best interest test will result in creating loopholes which allow financial planners to once again receive sales commissions, ongoing fees, volume rebates and all sorts of other incentives to sell a product," he said