Banks get what they paid for on ‘consumer protection’
Rather than use the opportunity of Arthur Sinodinos’ standing aside as assistant treasurer (which looks more and more like his permanent departure) to revise the Coalition’s Future of Financial Advice debacle, Finance Minister Mathias Cormann has doubled down, insisting the government will continue its efforts to repeal the consumer protections of FOFA.
Cormann has taken over Sinodinos’ duties while the latter dwells in ICAC purgatory, returning Cormann to the financial services portfolio he held in opposition. The few remaining supporters of the repeal of FOFA will have confidence that Cormann will keep up the efforts to remove protections like the ban on commissions and opt-in requirements for advice fees, given he led the campaign against the pro-consumer elements of FOFA in opposition.
This week brought plenty of FOFA-related action: the Financial Planning Association, remarkably, slammed the government’s proposal to again allow commissions, attacking commissions as so toxic they couldn’t be managed, but simply needed to be banned. The FPA represents about half of financial planners in Australia, and its chairman, Matthew Rowe, has said the FPA will sanction any members found to be accepting commissions. Also this week the Financial Services Council sprung to the defence of the government. The FSC is a retail superannuation industry peak body controlled by the banking cartel and AMP, which together control most of retail super, and it produced legal advice it insisted showed that financial planners would still be required to act in the best interests of clients, despite the government proposing to gut the definition of “best interests”.
The FSC, run by former NSW Liberal leader John Brogden, will be hoping that Cormann will hold the line, however. Cormann’s political fundraising efforts were a beneficiary of the FSC’s generosity before the last election: it donated $10,000 to Cormann in August 2012. The donations were part of a strategy of targeting financial services figures on both sides. The FSC donated a total of $3600 to Chris Bowen both before and after he became treasurer last year; and it gave $11,000 to current Treasurer Joe Hockey’s fundraising vehicle, North Sydney Forum (currently in the news for other Sinodinos-related reasons). And unlike the other big banks, Macquarie Bank and AMP, which either split their donations equally or gave trivial amounts, Sinodinos’ former employer, National Australia Bank, gave nearly $140,000 to the Liberal Party, compared to $57,000 to the ALP.
Bear in mind, as always, these figures are only up until June 30 last year and don’t capture what happened in the lead-up to the election itself.
As it turns out, the big banks and AMP and their proxies in the Financial Services Council are now the only remaining defenders of the FOFA repeal, which is now opposed not only by financial planners but the industry superannuation section, much of the business press, pensioner groups consumer groups and high-profile commentators like Alan Kohler. Either the government can stubbornly persist in a set of “reforms” that are almost universally opposed, even by the intended beneficiaries, or it can take advantage of Sinodinos’ misfortunes to hit reset.