Consumers at risk in Govt’s proposed wind back of financial advice

In a submission on the proposed changes to the Future of Financial Advice (FoFA) reforms, CHOICE has called for a comprehensive regulatory impact statement to assess the impacts on consumers.

“The proposed changes follow an aggressive campaign from banks and the financial advice industry, so it’s critical that any changes take into account the significant likely impacts on consumers,” says CHOICE CEO Alan Kirkland.

“While it is true that consumers ultimately pay for increased compliance costs in relation to financial advice, it is arguable they pay even more for conflicted advice and for services which they no longer value or are even aware of.

“In such cases, the balance needs to be in favour of protecting consumers and their retirement income, rather than protecting the income of financial advisers,” Mr Kirkland says.

CHOICE has recommended that in the absence of a consumer impact statement showing clear benefits that outweigh costs, the Government should not proceed with changes that would:

•    Dilute the best interests obligation;
•    Remove the opt-in requirement;
•    Limit the consolidated annual statement of fees to new clients; and
•    Water down the ban on commissions.

“It’s important to remember that the need for widespread reform followed the catastrophic effects of major financial advice scandals, and more than two decades of investigations from CHOICE into widespread conflicts of interest that compromise independent financial advice,” Mr Kirkland says.

“These are the problems that FoFA was designed to fix, and we urge the Government to reconsider its changes, or else explore alternatives to improve the quality of advice and build consumer trust and confidence in the financial planning industry,” Mr Kirkland says.

Read CHOICE’s submission on the FoFA amendments. For more information on CHOICE’s campaigns and product reviews visit