tip off

Crikey says: big banks 1, ripped-off pensioners 0

Rundle reports from Canberra as the carbon tax wends its way through the red benches. We expose the secret life of lobbyists. Keane on Brandis the philosopher-prince. Turnbull sneaks into the Oz’s 50th bash. The senior staffer bad-mouthing a national security official. Clive v Rupert: the Photoshop wars. And can a teacher really smack your kid?

As reported by Crikey, the government and Clive Palmer yesterday came to a deal that allowed the government’s gutting of the Future of Financial Advice consumer protections to proceed.

Mathias Cormann’s “reforms” will allow the return of conflicted remuneration to financial planning — the single biggest problem in a retail superannuation sector dominated by the big banks and AMP. It will also allow the return of secret fees for “advice” that clients never asked for and don’t want and will reduce the requirement for financial advisers to act in the best interests of clients to a “tick-a-box” exercise.

The only groups supporting Cormann and Palmer are the big banks, AMP and financial planners.

The sweet irony is that yesterday, the government’s hand-picked financial services inquiry headed by David Murray released an interim report flagging the high cost of superannuation management in Australia, the damage caused by conflicted remuneration and the poor quality of financial advice that Australians are receiving.

The retail sector currently makes up a third of Australia’s vast superannuation pool, which in coming years will reach $2 trillion. Cutting super costs, improving the quality of financial advice and ending conflicted remuneration are crucial not just to the retirement incomes of retail fund clients, but to Australia’s economy and budget in coming decades.

There may also be a political price to pay. The government has had a win now in its efforts to help the big banks. But henceforth — fairly or not — every financial scandal, every ripped-off pensioner, every dodgy financial planner, is owned lock, stock and barrel by the Coalition and the PUP senators who voted to do over consumers yesterday.

Let’s hope the banks sent them all a nice bottle of Grange to enjoy last night. It may not be so enjoyable in years to come.

6
  • 1
    klewso
    Posted Wednesday, 16 July 2014 at 1:32 pm | Permalink

    I thought it was funny, the media wondering last night what was behind these “high costs of super management” - with no one countenancing “pure greed/because they can” (or, in the case if the CBA - “Because they CON”?)?

  • 2
    zut alors
    Posted Wednesday, 16 July 2014 at 2:33 pm | Permalink

    If the banks thought to send any bottles of Grange I can guarantee there will be no thank you notes.

  • 3
    David Hand
    Posted Wednesday, 16 July 2014 at 2:35 pm | Permalink

    Why does your editorial state in bald unambiguous words, “Mathias Cormann’s “reforms” will allow the return of conflicted remuneration to financial planning — the single biggest problem in a retail superannuation sector dominated by the big banks and AMP.” while Matthias Cormann’s own announcement on 20 June 2014 states with equally bald unambiguous words, “The Government has supported the ban on commissions and conflicted remuneration for financial advisers since it was first legislated. At no point has the Government sought to re-introduce commissions or conflicted remuneration for financial advisers.”?

  • 4
    Daly
    Posted Wednesday, 16 July 2014 at 2:42 pm | Permalink

    David, if you take the bonus payments away from being linked absolutely to a particular product (commissions/conflicted remuneration) and link it instead to the $ the staff member sells, it doesn’t count as commissions/conflicted remuneration. But the staff and financial planners still work under the incentive to act in their own best interests (of their bonus) rather than the client’s best interests (do they need this product or advice?/is it better for them that what they are currently in?).

  • 5
    CML
    Posted Wednesday, 16 July 2014 at 4:56 pm | Permalink

    @David Hand - Situation normal. Cormann is teling li+s, just like all the other LNP pollies!!
    You must be very slow if you haven’t worked that out by now!!!

  • 6
    dazza
    Posted Wednesday, 16 July 2014 at 5:34 pm | Permalink

    I can not believe what banks around the world are getting away with. Disgusting for the government to keep kowtowing to these fraudters.

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