Assistant Treasurer defends Future of Financial Advice Laws
CONSUMER groups and the Opposition are warning a new storm could be on the horizon if the government attempts to water down key regulations.
The changes to the Future of Financial Advice Laws to be introduced by the Federal Government were needed to keep costs low for consumers wanting advice, according to Assistant Treasurer Arthur Sinodinos.
The initial reforms by the former government followed the cataclysmic folding up of Storm Financial, which swallowed the life savings of thousands from New South Wales and throughout regional Queensland.
Mr Sinodinos said the industry could be saved $90 million on installing the new regulations and save a further $190 million which would have been spent on meeting these legal requirements.
The most contentious change is an amendment which relaxes the need for advisors to work in the best interests of their clients.
Consumer advocate Choice warns the changes could again allow advisors to benefit by paid for handing out tainted advice.
Choice chief executive Alan Kirkland said only professional advisors could give proper advice, and the initial reforms forced them to put the customer first.
The Opposition has already hinted it may block the changes in the Senate, although it was yet to fully digest the announcement.
Shadow Treasurer Chris Bowen said the government was rewinding reforms designed to help prevent the "self-interest, hidden fees and high commissions" which led to the collapse of Storm Financial.
In a radio interview today, Mr Sinodinos defended the proposed reforms.
If forced to work for the "best interests" of clients, Mr Sinodinos said advisors may not be give the best advice, because they were too fearful to suggest riskier options.
He said he could not guarantee another crisis akin to Storm Financial would never happen, but that Australia needed access to "good advice at an affordable price".