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Unions mount attack on Abbott FOFA agenda

The Australian Council of Trade Unions has accused the Abbott government of prioritising the interests of the banks over the national interest in promising to amend FOFA.  

In a submission to the parliamentary committee overseeing the proposed amendments to FOFA, the ACTU said that trade unions have a stake in the regulation of financial advice because they “campaigned successfully for the introduction of compulsory super contributions”, calling on the government to enact “effective consumer protections”.

The government’s election promise to amend FOFA “gives the very strong impression that the government is more concerned to respond to intensive lobbying by the banks than in making good public policy that protects the interests of the large majority of Australians”.

“In our view, the changes contained in the draft bill, and discussed in the associated explanatory memorandum, will have the effect of undoing much of the positive change initiated by FOFA,” the ACTU submission states.

In particular, the ACTU rails against the changes proposed to the best interests duty, opt-in and fee disclosure requirements, as well as the “broadening [of] exemptions from the ban on conflicted remuneration”.

“The aim of FOFA is to improve the quality of financial advice. While the government states it supports this broad aim, the proposal to increase the instances in which conflicted remuneration can be paid runs counter to such improvement,” the submission states.

“In practice it will make it easier for banks and others to sell high-cost and inappropriate products that do not take appropriate account of the circumstances and best interests of clients.”