TheGovernment’s proposed fee disclosure regulations have been defeated in the Senate, with the Australian Labor Party’s motion to disallow the draft rules passed with the support of the Democrats, the Greens and all the independent Senators.
Shadow Minister for Financial Services Senator Stephen Conroy proposed the motion on the basis that the regulations, which required product issuers and other participants in the financial services industry to disclose fees and charges on products under the Financial Services Reform regime in dollar terms, were “flawed” and “not in the best interest of consumers”.
Under the draft regulations, issuers would only have to disclose fees in dollar terms if it was “reasonably practicable” to do so. However, Labor felt that this test “sets the threshold for the disclosure of fees and charges too low and would have created a loophole for product issuers…to avoid disclosing in dollar terms”.
Instead, Labor and the Democrats have proposed a new test — “that disclosure in dollar terms is required unless theAustralian Securities and Investments Commissiondetermines that it is not possible due to compelling reasons”.
The Government has agreed to these new draft regulations, and is expected to introduce them into Parliament in July.
In the course of the debate on the motion, Conroy also attacked both theAssociation of Superannuation Funds of Australia(ASFA) and theInvestment and Financial Services Association(IFSA) on the issue of fee disclosure saying: “The product manufacturers, issuers, floggers — call them what you will — will not, unless they are made to, provide consumers with all of the information that they need…Why is this like a wooden stake to a vampire?”
ASFA and IFSA have been given one month by the Parliamentary Secretary to the Treasurer, Ross Cameron, to come up with an agreed single figure fee disclosure model after which the Government will prepare the regulations.
