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FOFA changes a ‘retrograde step’

Any attempts to “water down consumer protections” which were originally introduced via the FOFA reforms pose a threat to the reputation of the financial planning industry, according to Taxpayers Australia.

The proposed changes to FOFA would include “relaxing” part of the regime that requires financial advisers to act in their clients’ best interest, Taxpayers Australia stated.

“That the financial planning industry is looking at a future without a robust best interests duty puts at real risk the regard that finance professionals would hope to earn from consumers, and will be a retrograde step for [the] industry,” the organisation said.

“Planners who are enthusiastic about the proposed FOFA wind-back had better dust off their garish checked suits, because the market will most likely trust the industry with their financial wellbeing as much as they’d trust a used car salesman.”

By going ahead with these proposals, the Assistant Treasurer Arthur Sinodinos would be “laying the groundwork for the next financial mis-selling scandal” said Taxpayers Australia spokesman Mark Chapman

“These proposals aren’t about cutting waste or eliminating red tape, they’re about removing the fundamental right of consumers not to be ripped off. There is no possible upside to consumers in these proposals and plenty of downsides,” he said.

“The basic right to be properly advised and to be automatically told how much of your investment is going into your chosen product and how much into the pocket of your adviser in fees and charges really shouldn’t be up for discussion in 2014.”