Retirees today welcomed the announcement from Senator Mathias Cormann that he will postpone making changes to the regulations around financial advice, giving hope that he will reconsider the planned removal of consumer protections.
Ian Yates, Chief Executive of leading seniors advocate COTA Australia, urged the Acting Assistant Treasurer to listen to the concerns of retirees who simply can’t afford to be given poor financial advice.
“Retirees rely on sound, independent financial advice as they have no opportunity to recoup lost investments or assets when self interested financial advisors are blinded by commissions and don’t act in their clients’ best interests,” Mr Yates said.
“Senator Cormann has a real opportunity now to consult genuinely with consumer advocates and fully
consider the damage the Government’s changes could do.
“The proposed changes remove important safe guards which were put in place following the disasters of
Storm Financial and West Point for many Australians, but also the day to day problems of people not getting optimum advice on their hard earned retirement savings.
“These safeguards include the requirement for financial advisors 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 advisors.
“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 advisors 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 advisors have no contact with clients for years while making money out of them and think that’s alright.
“Australia needs a robust independent financial planning and advice industry to make sure that retirees can get the best possible advice on the best way to manage their retirement savings.”
COTA believes older Australians would be best served by a ban on all commissions or third party payments to all financial advisors.
“This is the only realistic way we can ensure consumers are getting quality, independent, untainted advice that is in their best interest,” Mr Yates said.
“We look forward to meeting with the Acting Assistant Treasurer and urging him to put the interests of
consumers, not banks and other product salespeople, first in the Government’s deliberations on this issue.”
Media contact: Ian Yates 0418 835 439, Olivia Greentree 0439 411 774