The financial future of many seniors depends heavily on the government of the day to have financial laws in place that will protect the consumer. In my post of 17 June 2013 I raised a number of concerns surrounding the Abbott Government’s intention to rollback the Future of Financial Advice (FOFA) laws. I mentioned that these reforms, introduced by Labor, must stay in place as a protective mechanism for consumers. Without strict financial regulations in place many people will receive misguided financial advice that is not in their best interest e.g. Timbercorp Investment Scheme.
Last week a group of Senators after hearing from people affected by the Timbercorp collapse could not, with a good conscience, support the FOFA changes. It was an unprecedented move when Senator Nick Xenophon then spoke on behalf of the group (including Senators Jacqui Lambie and Ricky Muir) stating they would reject the proposed changes. I was pleased to hear this. It is my view that the Government has a responsibility to enact responsible laws. Responsible laws protect people from financial ruin, not the people who make money from others vulnerability.
It often happens when Government’s change, groups or individuals lobby the government for change. In this case the insurance companies, banks and the Financial Planning Association (FPA) lobbied the Federal Government to soften Labor’s FOFA laws. The rules introduced by Labor meant that Financial Planners had to act “in the best interests of their client” and not promote products where the Financial Planner receives a greater incentive to promote ‘insider’ products.
Your money matters, my money matters. Anyone who has any money to invest and is unable to manage it themselves should only engage a person who has an Australian Financial Services Licence (AFSA). The Australian Securities and Investments Commission (ASIC) website holds very informative material that will help. MoneySmart is their website for consumers. You can also give them a call if you can’t find the information you are looking for.
Last Wednesday the Senate passed a motion to disallow the FOFA changes (32-30 vote). There was pandemonium in the Senate as a result. While the Financial Services Council criticised the move, consumers supported the Senate’s move as a great win for customers. Whatever you may think of Senators Jacqui Lambie and Ricky Muir I admire their willingness to stand up and vote for what is right. All investors owe them a debt of gratitude.