Monday 23rd of April 2018

a big fat belgian cigar hell bent on removing your protection against losing your pants...


The Federal Government is pressing ahead with its plan to wind back Labor's financial advice laws aimed at protecting investors.

The Coalition has been under pressure over some of the controversial changes it flagged to the Future of Financial Advice (FoFA) reforms.

Labor introduced the FoFA reforms after a series of high-profile financial collapses rattled investor confidence in the sector.

The Coalition has sought to moderate them and, after a Senate inquiry largely backed the changes earlier this week, Finance Minister Mathias Cormann has told the ABC's AM program the Government will go ahead with most of them.

The Government will proceed with scrapping a legal obligation requiring financial advisers to take "any reasonable steps" in their clients' interests.

Senator Cormann says it is unnecessary as there are other safeguards in place, including six steps prescribed in the Corporations Act.

"That is adequate in order to ensure that financial advisers act in the best interests of their client," he said.

The proposed changes do not have the backing of Labor or super funds.


hocus pocus advice versus proper investment...

John Brogden, the chief executive of the Financial Services Council, which supports the government’s changes, said they “provide a very significant amount of comfort to consumers that commissions are gone”.

But David Whiteley, the chief executive of Industry Super Australia, which opposes the changes, said the existing ban on commissions was “water tight” and the proposed changes “will allow some forms of conflicted remuneration and incentives to financial advisers to sell certain products”.

“If they didn’t want any kind of conflicted remuneration at all they would leave the legislation exactly as it is,” he said.

And the Greens spokesman Senator Peter Whish-Wilson said the government was “being cute with their definition of conflicted remuneration and the difference between personal and general advice. They are still going to allow incentives that by any definition, are conflicted remunerations such as sales-based bonuses that drive the culture that we need to change. This is particularly the case in large financial service companies and banks.”

The government also insists its proposed laws do still require a financial adviser to act in the best interests of a client, keeping a six-part check-list of specific things a financial adviser has to do, but removing a catch-all provision which “created too much complexity and uncertainty”.

Brogden said there had been “a malicious campaign of misinformation” about the government’s changes to the “best interest test” and that under its planned laws “it is hard to imagine … that we could ever again see the sort of [financial] scandals we have seen in the past”.

But the consumer group Choice, which is asking all federal politicians to oppose the changes, said the best interest test had been watered down.

“The government claims that it is improving the best-interests obligation when in it is removing a professional duty for advisers. You don’t go to a doctor expecting them to follow a check-list of tasks; you expect them to use their professional judgment to find the best solution for you. It should be the same for financial advisers.

cormann obviously wants more banking bad advice...

The Federal Government is resisting calls for a royal commission into the corporate watchdog and the Commonwealth Bank.

A Senate inquiry into a fraud scandal that left thousands of customers millions of dollars out of pocket has slammed the Australian Securities and Investments Commission's (ASIC) handling of rogue financial planners working at the Commonwealth Bank.

The majority report suggests both organisations should face a royal commission.

However, Finance Minister Mathias Cormann says another inquiry into the financial system is already underway.

"I've had conversations with the senior leadership at the CBA in relation to some of these matters over the past week," Senator Cormann said.

"Once I've properly studied the report I would expect that I would have some further conversations.

"We already have a financial systems inquiry which is currently underway, so without pre-empting the Government's response, obviously that financial systems inquiry's considering the role of ASIC as part of our financial system."

While the Government believes the ongoing inquiry will help lift standards across the industry, it does want to put more pressure on the Commonwealth Bank to do more to help customers that lost money.

Senior sources say the bank's response to the committee's report has been "inadequate" and that there needs to be a "mea culpa" from the bank and a "more considered response" to the committee's findings.

"I have spoken to (CBA chief executive) Ian Narev about the findings of the Senate Economics Committee today and I am confident that he and the CBA will have more to say by way of a considered response to that report next week," Senator Cormann said.