Plans to disallow significant portions of the Government's Future of Financial Advice (FOFA) reforms have been blocked by the Senate.
Labor Senator, Sam Dastyari described the Government's reforms as "some kind of protection racket" for "a small number of crook, criminals and con men" who have given the financial advice industry a bad name, as he pushed his motion to disallow items 1 to 27 inclusive and item 30 of the Corporations Amendment (Streamlining FOFA) Regulation 2014.
Senator Dastyari said the Minister for Finance and Acting Deputy Treasurer, Senator Mathias Cormann, had "exceeded his powers under the Corporations Act" and had pushed too far with his legislative reforms.
The Senator claimed that "a number of good, hardworking, decent, financial advisers out there want to do the right thing… are realising that the best way to get public confidence is to make sure there are rules and regulations in place that hold them to a high standard".
He added that the Government's only supporters were "the big financial planning institution houses", and "even they are walking away as quickly as they can from the Government".
Senator Dastyari said the Government's reform measures provided "a loophole for advisers that will make this safeguard ineffective; scrapping of the opt-in requirement allowing an adviser to continue to charge fees indefinitely without receiving consent from their client; make changes to annual disclosure so that advisers only have to provide annual disclosure to clients who commence with them after 1 July 2013; and lift the ban on conflicted remuneration that will only apply to commissions on general advice which will open the door for a sales-push culture of products over advice".
The motion was defeated by two votes, with the support of the members of the Palmer United Party and Senator Ricky Muir of the Australian Motoring Enthusiast Party.
