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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.
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