The government’s changes to FoFA are now under threat, following a move which saw four crossbench senators join with the Labor and the Greens to overturn the changes to the financial advice laws. This reverses some of the changes which as we discussed before were aligned with the major banks, and saw consumer protection eroded. As a result, Labor now appears to have secured the support it needs in the Senate to reverse the regulations. This overturns the earlier deal with the government and the minor Palmer United Party (Pup) in July to push through the Senate changes to Labor’s Future of Financial Advice (FoFA) laws.
Pup Senator Jacqui Lambie, and crossbenchers Ricky Muir and John Madigan, and independent senator Nick Xenophon have joined with the opposition on the issue. Xenophon called it “a coalition of common sense”.
“Our common, unequivocal objective is to have the government’s FoFA regulations disallowed today in the Senate because they are unambiguously bad for consumers”
ASIC notes the Senate has disallowed the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014.
ASIC will take a practical and measured approach to administering the law as it now stands following the disallowance of the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014. We will take into account that – as a result of the change to the law that applies to the provision of financial advice – many Australian financial services (AFS) licensees will now need to make systems changes. ASIC recognises this issue may arise in particular areas, including fee disclosure statements and remuneration arrangements.
We will work with Australian financial services licensees, taking a facilitative approach until 1 July 2015.
We believe this represents an important opportunity to revisit the fundamental flaws in FOFA as originally incarnated, and exacerbated by the recent government amendments. But is also continues the uncertainty around the nature of good financial advice, something which is critically important to get right, given the swelling superannuation balances in Australia, now worth $1.85 trillion.
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