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You can find the current article at its original source at http://www.theguardian.com/world/2014/mar/25/mathias-cormann-pauses-financial-advice-changes-to-explain-them
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| Financial advice reforms opposed, not misunderstood, say industry groups | Financial advice reforms opposed, not misunderstood, say industry groups |
| (5 months later) | |
| The finance minister says he has “paused” the government’s controversial changes to financial advice regulation to “explain” them to “key stakeholders”, but those stakeholders say they already understand the government’s plan and will not back it without significant changes. | The finance minister says he has “paused” the government’s controversial changes to financial advice regulation to “explain” them to “key stakeholders”, but those stakeholders say they already understand the government’s plan and will not back it without significant changes. |
| Mathias Cormann, who resumed responsibility for the changes after Arthur Sinodinos stood aside as assistant treasurer during Independent Commission Against Corruption hearings, told Guardian Australia on Monday he was “pausing” a plan to immediately implement the changes via regulation “to have further conversations with key stakeholders and remind them what they agreed to before the election … I will press the button again once I am satisfied most people are back on the same page”. | Mathias Cormann, who resumed responsibility for the changes after Arthur Sinodinos stood aside as assistant treasurer during Independent Commission Against Corruption hearings, told Guardian Australia on Monday he was “pausing” a plan to immediately implement the changes via regulation “to have further conversations with key stakeholders and remind them what they agreed to before the election … I will press the button again once I am satisfied most people are back on the same page”. |
| But he also said the government remained committed to the proposed changes – which it introduced as legislation as part of its “bonfire of regulation” – and would consider “tweaks” but not major changes. | |
| The Financial Planning Association, which represents 50% of Australia’s financial planners, says at least one major change is needed before it can possibly back the plan. | The Financial Planning Association, which represents 50% of Australia’s financial planners, says at least one major change is needed before it can possibly back the plan. |
| The government is proposing to allow commissions for financial providers providing “general advice” – which had been outlawed by the former Labor government in legislation introduced in response to major financial industry collapses including that of Opes Prime and Storm Financial. | The government is proposing to allow commissions for financial providers providing “general advice” – which had been outlawed by the former Labor government in legislation introduced in response to major financial industry collapses including that of Opes Prime and Storm Financial. |
| Mark Rantall, chief executive of the FPA, said his organisation, which represents half of Australia’s financial planners, would not accept this. | Mark Rantall, chief executive of the FPA, said his organisation, which represents half of Australia’s financial planners, would not accept this. |
| “We want the legislation to prohibit all commissions,” he said. “If that is done we’ll support the reforms. If it isn’t we will maintain our existing position.” | “We want the legislation to prohibit all commissions,” he said. “If that is done we’ll support the reforms. If it isn’t we will maintain our existing position.” |
| “Commission potentially lead to mis-selling … over the years financial product manufacturers have used commissions to influence advice and we do not believe they should be reintroduced.” | “Commission potentially lead to mis-selling … over the years financial product manufacturers have used commissions to influence advice and we do not believe they should be reintroduced.” |
| Seniors organisations are similarly insistent that the problem is not their comprehension of the proposed new laws, but rather the laws themselves. | Seniors organisations are similarly insistent that the problem is not their comprehension of the proposed new laws, but rather the laws themselves. |
| National Seniors, which has 200,000 fee-paying members aged 50 and over, says the minister needs to go back to the drawing board. | National Seniors, which has 200,000 fee-paying members aged 50 and over, says the minister needs to go back to the drawing board. |
| “Our independent legal advice says these changes will cause major consumer detriment … our objections are fundamental. We don’t support the changes,” said the organisation’s chief executive, Michael O’Neill. | “Our independent legal advice says these changes will cause major consumer detriment … our objections are fundamental. We don’t support the changes,” said the organisation’s chief executive, Michael O’Neill. |
| The nation’s peak consumer organisation, Choice, also says “tweaks” won’t start to address its concerns. | The nation’s peak consumer organisation, Choice, also says “tweaks” won’t start to address its concerns. |
| “Mere tweaks won’t remove our concerns and our lobbying campaign has barely begun. We are mobilising our supporters and MPs and senators can expect a lot of correspondence about this,” said chief executive, Alan Kirkland. | “Mere tweaks won’t remove our concerns and our lobbying campaign has barely begun. We are mobilising our supporters and MPs and senators can expect a lot of correspondence about this,” said chief executive, Alan Kirkland. |
| The Council on the Ageing is also calling for a complete ban on commissions, as well as other changes. | The Council on the Ageing is also calling for a complete ban on commissions, as well as other changes. |
| "The proposed changes remove important safeguards which were put in place following the disasters of Storm Financial and Westpoint for many Australians, but also the day to day problems of people not getting optimum advice on their hard earned retirement savings,” said chief executive Ian Yates. | "The proposed changes remove important safeguards which were put in place following the disasters of Storm Financial and Westpoint for many Australians, but also the day to day problems of people not getting optimum advice on their hard earned retirement savings,” said chief executive Ian Yates. |
| "These safeguards include the requirement for financial advisers to act in all reasonable ways that would be in the best interest of their client. Abolishing this simply weakens protections and the recourse for consumers against dodgy advisers. | "These safeguards include the requirement for financial advisers to act in all reasonable ways that would be in the best interest of their client. Abolishing this simply weakens protections and the recourse for consumers against dodgy advisers. |
| "The government had also proposed to reinstate commissions for ‘general advice' which gives incentives to the industry to sell products instead of providing independent advice on a fee for service basis, which is what consumers need. | "The government had also proposed to reinstate commissions for ‘general advice' which gives incentives to the industry to sell products instead of providing independent advice on a fee for service basis, which is what consumers need. |
| "Another government proposal is to abolish the requirement for advisers to contact their clients at least once every two years to confirm they are still willing to pay for the services they are receiving. | "Another government proposal is to abolish the requirement for advisers to contact their clients at least once every two years to confirm they are still willing to pay for the services they are receiving. |
| "This is a basic consumer protection, which to describe as expensive red tape implies that financial advisers have no contact with clients for years while making money out of them and think that's alright.” | "This is a basic consumer protection, which to describe as expensive red tape implies that financial advisers have no contact with clients for years while making money out of them and think that's alright.” |
| But Cormann is defending the government’s intention to allow banks and other institutions to reward employees for giving general advice about their products. | But Cormann is defending the government’s intention to allow banks and other institutions to reward employees for giving general advice about their products. |
| "If somebody goes into a Holden dealership to ask for some advice about a Holden product, you wouldn't expect the Holden employee to do anything other than provide advice on the Holden product," Cormann said. | "If somebody goes into a Holden dealership to ask for some advice about a Holden product, you wouldn't expect the Holden employee to do anything other than provide advice on the Holden product," Cormann said. |
| A Senate report on the government’s proposed changes is due on 16 June. They are opposed by Labor and the Greens and will not pass the existing Senate. | A Senate report on the government’s proposed changes is due on 16 June. They are opposed by Labor and the Greens and will not pass the existing Senate. |
| The government could “press the button” on the “paused” regulations during the final two weeks of June in order to stop the existing changes coming into effect from 1 July. | The government could “press the button” on the “paused” regulations during the final two weeks of June in order to stop the existing changes coming into effect from 1 July. |
| This was the intention of the regulations that Senator Sinodinos had planned for this week. | This was the intention of the regulations that Senator Sinodinos had planned for this week. |