Reforms to financial advice laws could water down consumer protection, Maurice Blackburn warns
20 December 2013
The protection of Australian consumers from unscrupulous financial advisers could be under threat with the Federal Government’s proposed changes to financial advice laws, according to experts at leading law firm Maurice Blackburn.
John Berrill, principal at Maurice Blackburn Lawyers and head of the firm's financial advice dispute practice, has described some of the reforms announced today to the Future of Financial Advice (FOFA) legislation as a backwards step that may hurt consumers.
"The overarching best interests requirement in the existing Future of Financial Advice legislation is an important measure that helps to protect consumers and ensure that advisers put their client's interests at the heart of all their work," Mr Berrill said.
"The Government's plan to remove 'catch-all' from the best interests duty could water down this essential consumer protection, while the recommended introduction of scaled advice could limit the scope of advice given to clients."
Mr Berrill also expressed concerns about the Government's plans to remove the "opt-in" requirement for financial advisers to seek their client's agreement every two years to continue their services.
"The opt-in requirement is a continuous disclosure obligation that ensures financial advisers remain transparent about their work and their fees. Removing the opt-in measure is a backwards step that could see consumers paying for commissions and ongoing financial advice that they do not receive."
Maurice Blackburn is urging the Government and the Assistant Treasurer to consult with industry and consumers to make sure protection of Australian consumers is paramount in the reforms.
"We act for everyday Australians who have fallen victims to poor financial advice and lost hundreds and thousands of dollars of their life savings," Mr Berrill said.
"While we recognise that some of the reforms will help to clarify the rights and obligations under the laws for both industry and consumers, there are some changes we believe could seriously weaken consumer protection."