The Abbott Government introduced the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 into the Australian Parliament on 19 March 2014 to implement changes to Future of Financial Advice (FOFA) legislation.
This bill winds back consumer protections put in place in 2012 after the 2009 Storm Financial-Commonwealth Bank debacle and resulting court cases revealed significant problems in the finance and banking sector and, winds them back in the face of evidence (such as the media report below) that the sector still hasn’t finished clearing up the mess left by avaricious financial planners.
ABC News 16 May 2014:
The Commonwealth Bank will reopen compensation offers to thousands of its clients affected by its financial planning scandal, after the corporate regulator said it was "extremely disappointed" in the bank's compensation process.
The move follows a joint investigation by Four Corners and Fairfax which exposed how poor financial planning advice at the bank had left some clients almost penniless.
The program revealed that commissions and bonuses helped create a sales-driven culture inside the bank which led to some planners losing millions of their customers funds.
The Commonwealth Bank will now have to dramatically expand its compensation scheme, with 4,000 clients now potentially having their case for compensation reopened. Originally, only 1,100 were offered compensation.
Australian Securities and Investment Commission (ASIC) chairman Greg Medcraft said the problem was not with the original compensation arrangements, but with the implementation.
"The compensation process originally developed was carefully designed to include a range of measures to protect the interests of customers involved. ASIC is extremely disappointed that not all of those measures were applied to all customers," he said.
"We are now taking immediate action to remedy the inconsistent treatment."…..
On 20 March 2014, the Senate referred the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 to the Senate Economics Legislation Committee for inquiry and report due on 16 June 2014.
The Senate changes composition on 1 July 2014 and the Abbott Government is likely to vigorously woo those new senators from minor parties in order to get its own way.
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