Industry Super Australia (ISA) has urged the Senate to disallow the FOFA amendment regulations, saying reforms have “bewildered consumers” and put clients at risk of conflicted advice.
ISA said lobbying by banks has led to consumer protections being removed from the laws through “surgical use of fine print and caveats” and that the remaining laws would place Australians at risk of conflicted advice.
“These changes were lobbied for by the banks and financial planners, including the Commonwealth Bank,” ISA chief executive David Whiteley said.
“If these regulations are not disallowed by the Senate they will return the financial planning industry to the bad old days when consumers don’t know if financial advice is impartial, or tainted by kick-backs paid to their financial planner. “
ISA said the regulations in current form reduce the best interests test “to a checklist” and remove opt-in, which will allow commission-like fees to return.
In addition, ISA said the regulations create loopholes that will allow nine forms of shadow commissions to be paid.
“All consumers, but particularly retirees, deserve to be able to rely on iron-clad consumer protections when receiving financial advice,” Mr Whiteley added.
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