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Crikey Says

Jun 20, 2014

Crikey says: FOFA repeal means more rip-offs and more ruined retirements

Guy Rundle’s Marxist guide to the World Cup. Keane on the latest WikiLeaks drop. Breaking: the official regulator finds against the ABC over that infamous Chris Kenny skit. The letter to the editor the Oz wouldn’t run. Assange touchy on question of boredom. Only offensive comments at The Age. It’s time to face fiscal reality. And is Abbott blocking ABC and SBS appointments?

As flagged by Crikey earlier this week, the government has revealed today it is moving ahead with its plans to repeal the Future of Financial Advice reforms, albeit with a fig leaf of some additional wording addressing the concerns expressed even by financial planners about the restoration of conflicted remuneration.

That means we won’t see financial planners criticising the government’s package — but the additions will do nothing to address the concerns of seniors’ groups, consumers and key sections of the superannuation industry that repealing FOFA will return us to the bad old days of financial planning that gave us collapses like Storm and Westpoint. Financial planners will still be able to avoid acting in the best interests of their clients if they can satisfy a tick-a-box legislative requirement. And it will perpetuate the rort by which financial planners exploit the disengagement of their clients to charge fees for advice people don’t ask for and don’t want.

The fact that the Financial Services Council, controlled by the big banks and AMP, and the Australian Bankers’ Association have today lauded the government’s intention to proceed reveals exactly whom the gutting of FOFA is intended to benefit.

Moreover, the government is doing it at the exact moment it has taken the scalpel to the budget of the Australian Securities and Investments Commission, which by its own admission failed to effectively regulate the Commonwealth Bank’s financial planners and then failed to properly vet the compensation payments the bank was forced to pay as a result of its planners’ malfeasance.

The result will be more rip-offs, more gouging, more lost savings, more ruined retirements. And it will entirely be the fault of this government.

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5 thoughts on “Crikey says: FOFA repeal means more rip-offs and more ruined retirements

  1. Dogs breakfast


    Why would a government conspire against its citizens, to the benefit of large corporations, for no public benefit whatsoever.

    Why would it do this?

    The answer to that question, though seemingly obvious, goes to the heart of why democracy is not working. This is just flagrant, dumbfounding, mind-boggling and pointless.

    Just how bad can a government be, just how much damage can you do in three years. Lord knows, soon enough they will have signed off our capacity to regulate our own banking and financial institutions.

  2. AR

    Brekky beat me to it – how blatant a ‘deal delivered’ move is this?
    On what ethical (sic! sorry, inappropriate word for this government, and politics in general)grounds can it be justified?

  3. zut alors

    It’s not only plain stupid but illogical. If more people lose their life’s savings they will no longer be paying tax on their investments.

    With bated breath I await this government’s next creative policy buffoonery.

  4. Malcolm Street

    zut – worse than that. Victims of scams who’ve lost their retirement savings will end up on the age pension. The government is effectively using future tax payers’ money to prop up the dodgiest elements of the financial services industry while crying crocodile tears about the cost of the pension!

  5. I.Klajn

    Are the changes to FOFA in anticipation of the Trade in Services Agreement being signed?