Watching your superannuation fail to perform as promised?

It will only get worse, because this is what Abbott Government Senator Arthur Sinodinos had organised (before he stepped aside as Assistant Treasurer for the length of the NSW ICAC Operation Credo-Spicer Investigation) in order to facilitate the gouging of workers’ superannuation by financial advisers and banks:

• remove the need for clients to renew their ongoing fee arrangement with their adviser every two years (also known as the 'opt-in' requirement);

• remove the requirement to provide an annual fee disclosure statement to clients in ongoing fee arrangements prior to 1 July 2013;

• remove the 'catch-all' provision from the list of steps an advice provider may take to satisfy the best interests obligation;

• facilitate the provision of scaled advice;

• clarify the meaning of ‘intrafund advice’;

• clarifying the operation of the 'mixed benefits' provisions; and

• amend the application of the ban on conflicted remuneration including:

– exempting general advice;

– exempting monetary benefits paid in relation to certain life risk insurance

offerings inside superannuation;

– amending the exemption for execution-only services to provide that only

advice provided by the party receiving the benefit is considered;

– broadening the exemption for training and education that relates to

operating a financial services business; and

– broadening the existing exemption for basic banking products to allow an

agent or employee of an authorised deposit-taking institution to access the

exemption in a broader range of circumstances.

______________

Documents:

Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014

Explanatory Memorandum

______________

The Abbott Government cannot pretend that it doesn't understand that this is a retrograde step.

In February 2003 the Australian Securities and Investment Commission released a report on a survey on the quality of financial planning advice which found:

A common observation by several judges was that clients’ interests did not appear to be the sole factor in the plan strategy or product selection. They characterised this practice as “commission-driven product selling, not impartial advice”.

“… like many others, [this plan] is just another ‘selling tool’ for managed

funds” – Judge 4

“This generic pro-forma style plan is [a] financial needs analysis / sales

justification document. “ – Judge 2

These plans often gave no reason why the recommended course of action was

preferred, or the reasons appeared skewed to justify the product recommendation.

“Plan seemed to focus straight to wealth accumulation via the advisor’s

company master trust. No explanation as to why, the pros and cons, and

how this recommendation was going to fully meet the client needs and

objectives.” – Judge 9

Recommendations frequently overlooked options that may be more cost-effective:

  • adviser elects to waive product entry fee — rarely recommended;

  • low cost superannuation funds — never recommended;

  • pay off mortgage rather than invest cash — rarely recommended;

  • salary sacrifice — recommended in a minority of plans.

About half the plans recommended selling at least some of the client’s existing

investments.

The combination of commission-based remuneration and management sales

targets sits uncomfortably with good practice and professional advice.

“The main recommendation was to rollover client’s superannuation into a

fund [master trust] from which the advisor receives commissions. No

analysis or discussion to justify this. ‘Churning’ in a newer guise.” –

Judge 7

“This plan is unusual in that it exhibits some degree of advice integrity, a

characteristic not commonly evident in many other plans reviewed. “ –

Judge 4

There appears to be a mismatch between what the consumers thought they were

getting and what they actually received. Our consumer volunteers asked for a

comprehensive financial plan....

Nor can the Abbott Government pretend that weakening or dismantling consumer protections found in the Corporations Amendment (Future of Financial Advice) Act 2012 does not have potential negative consequences.

One only has to look back at the 2009 $3 billion collapse of Storm Financial Ltd to see the personal and financial devastation for an estimated 3,000 investors left in its wake.

Retirees who lost money in the collapse of financial institutions are becoming angry about the Abbott Government's plans. However Abbott himself is insouciant.

The Guardian 18 March 2014:

Victims who lost billions in the collapse of financial advice firms such as Storm Financial are joining consumer groups, superannuant and seniors associations and industry superannuation funds in an angry backlash against the government’s plan to wind back new consumer protection laws.

The Coalition’s much-vaunted “repeal day” on Wednesday will include the Corporations Amendment (Streamlining of Future of Financial Advice) Bill to implement the windback – once again allowing advisers to earn sales commission and other so-called “conflicted remuneration” from providing general financial advice and removing the requirement for financial advisers to tell customers how much they are receiving in commissions every year and give them the chance to opt out of the arrangements every second year.

With the legislation certain to be blocked by Labor and the Greens in the existing Senate, which sits until 30 June, and many of the existing requirements set to take effect from July, the government is also planning to rush through regulations to try to implement its windback in the meantime.

The opposition leader, Bill Shorten, said the government’s proposed changes were “bad laws” and would mean “the wholesale dismantling of oversight to protect our consumers”.

But Tony Abbott said on Monday the former Labor government’s legal protection laws – which his government is seeking to water down – were “a classic case of regulatory overkill” because it was already an “ethical given” that professional advisers would take into account the best interests of their clients….

Any readers who may be thinking of lobbying against repeal of the Corporations Amendment (Future of Financial Advice) Act 2012 might like to view this new website, Save Our FOFA, which states that as part of our campaign to protect consumers, we want to help them lobby local MPs and senators.

Nice Work If You Can Get It: Liberal Senator Arthur Sinodinos' $2,000 an hour former directorship

Excerpt from 17 March 2014 public hearing transcript in the matter of Operation Credo-Spicer before the NSW Independent Commission Against Corruption (ICAC):

 Counsel assisting ICAC, Geoffrey Watson SC:

I’ll now deal with Australian Water Holdings and its pursuit of its chances

with the Liberal Party. As I have said, Mr Di Girolamo is personally

strongly connected with the Liberal Party. A State election was slated for

10 March 2011 but it was apparent by 2008 that the Government would change

and the Coalition would take power. Mr Di Girolamo set out to build links

between Australian Water Holdings and the Liberal Party. In October 2008

Mr Di Girolamo organised Arthur Sinodinos, now Senator Sinodinos, to

join the board of directors at Australian Water Holdings and its subsidiary

companies. At the time Mr Sinodinos was the Treasurer of the New South

Wales branch of the Liberal Party and he was soon to become its president.

Mr Sinodinos became the fifth director of Australian Water Holdings at a

time when there were only about 10 employees. Not many companies could

sustain a ratio of one director for every two employees and Mr Sinodinos’

commitments were not onerous. There could not have been more than

100 hours during a year. For this Mr Sinodinos was paid $200,000 per year

plus bonuses. This might seem like a lot for a couple of weeks’ work,

especially when one considers that the chairman of Sydney Water, and that

is a really huge business, the chairman of Sydney Water was paid just over

$100,000 a year. And I mentioned bonuses. Mr Sinodinos was given equity

in Australian Water Holdings. He was given five per cent of its share

capital at no cost to him. In addition, he was on a bonus so that he would

receive a further 2.5 per cent of the share capital in the event that the

Government approved Australian Water Holdings’ PPP proposal.

Based upon PricewaterhouseCoopers’ valuation if the PPP came through

Mr Sinodinos would have enjoyed a 10 million or $20 million payday. It’s

presently difficult to offer observations on the conduct of Mr Sinodinos. He

has other involvements which will come under scrutiny in Operation Spicer.

It’s quite transparent that Mr Sinodinos’ true role in Australian Water

Holdings was to open lines of communication with the Liberal Party and

there will be evidence that he tried to do so….

But Australian Water Holdings retained other lobbyists, it retained the firm

of Jackson Wells and paid it plenty, it retained Tim Koelma who was very

closely associated with Chris Hartcher of a monthly retainer of more than

$7,000. In April 2007 it retained Paul Nicolaou, the Liberal Party fundraiser

on a monthly retainer of $5,000. In January 2011 it also retained the former

Liberal Party MP Michael Photios on a monthly retainer of $5,000. In

Mr Photios’ case Mr Di Girolamo proposed that should the PPP be

approved Mr Photios would receive a $1 million bonus. Here is the motion

which was placed before the board of Australian Water Holdings on that

subject, Michael Photios, I recommend we retain - I’m so sorry, this is a 

recommendation made by the CEO to the board. “I recommend we retain

Photios, six month retainer $5,000 per month with a project payment of

$1 million on financial close of PPP in Northwest Growth Centre.”

Now Commissioner, it seems, and the evidence about this is a little strange

as you’ll see in due course. It seems that that motion was not passed but

still we’ll be asking one or two questions about it. Apparently I said that,

Mr Sinodinos said that it would be working 100 hours a week. I’m so sorry

about that. It’s only 100 hours a year. That’s a pretty general allowance on

the evidence that I’ve seen.

In any event going back to the lobbyists, it seems that at a time when

Australian Water Holdings had about 10 employees it also had five

lobbyists. This is all the more striking when it is known that at that time

Australian Water Holdings was suffering a cash flow crisis so severe that it

was unable to pay it’s tax commitments as they fell due….

Following this 17 March public hearing the Liberal Party of Australia announced that it was repaying the political donations allegedly improperly received from Australian Water Holdings. 

Readers might recall that on 1 March 2013 The Sydney Morning Herald reported:

Liberal senator Arthur Sinodinos, already in strife over his involvement in a company with alleged links to embattled Labor powerbroker Eddie Obeid, last night apologised ''unreservedly'' to Federal Parliament for failing to declare interests in several other companies...

In early 2012 the NSW Coalition government awarded AWH a 25-year water infrastructure deal without any tenders. Corporate records show that Mr Sinodinos was a director of AWH from November 2008 until November 2011. On Wednesday, apparently to distance himself from AWH, the senator announced he would forgo his 5 per cent shareholding to which he was entitled following his time as chairman, worth up to $3.75 million.

These shares were held on his behalf in a ''gentleman's agreement'' by AWH boss and major shareholder Nick di Girolamo, who the Herald last year revealed was a close friend of the Obeid family.

Mr Sinodinos, who is the shadow parliamentary secretary to Mr Abbott, denied last night that he had at any time asked that the shares ''be held secretly on my behalf''...

UPDATE

The Sydney Morning Herald 19 March 2014:

According to evidence presented to the commission, Sinodinos was a director and then chairman of a company, Australian Water Holdings, which ruthlessly exploited a legal loophole to rip off NSW taxpayers to the tune of hundreds of thousands of dollars.

Allegations that Australian Water Holdings claimed "administrative expenses" from Sydney Water, with whom it had an agreement over provision of water infrastructure for land release in the city's north-west, are of a nature which would make most of us blush.

The commission has heard limousine hire, corporate boxes and countless other expenses were all cynically invoiced to Sydney Water - a taxpayer-owned corporation.

Counsel assisting the inquiry, Geoffrey Watson, SC, has outlined to the inquiry how the loophole was exploited to provide company executives, including Nick Di Girolamo and John Rippon, with million-dollar salaries.

When Sinodinos became an AWH director in October 2008 he was paid $200,000 per year, plus bonuses, for according to the commission, "a couple of weeks work". This too was allegedly funded by Sydney Water as an "administrative expense".

One of Abbott's flying monkeys goes on the attack

The YouTube video of Senator Scott Ludlum’s invitation to the Prime Minister to visit West Australia had by 13 March 2014 been viewed 743,410 and received 17,674  likes and the numbers are still growing 

One can only suspect that Murdoch journalist Miranda Devine was still befuddled by prime ministerial BBQ fumes when she wrote this in The Daily Telegraph on 12 March 2014:

Few listeners for the Left’s shouting

SCOTT Ludlum’s “viral” hate speech against Tony Abbott signified the moment the Left finally lost its marbles: 10.08pm, Monday March 3, 2014. We can see them frozen in time, like the Edvard Munch painting The Scream, as the final awful realization hits home of Tony Abbott’s comprehensive victory and his determination to make his prime ministership count.

They knew before Newspoll confirmed it this week that all their dishonest, sneaky, bigoted, dog-whistling attempts to demonise Abbott and his government

are falling on increasingly deaf ears.

Picture: John Tiedemann Source: DailyTelegraph

That Monday night, to a near empty chamber, Ludlum, the telegenic Greens senator from WA, who faces political annihilation at the re-run of the WA Senate poll next month, peppered his diatribe with the obligatory “rednecks” and “murderous horror unfolding on Manus Island”.

He accused Abbott of “waving your homophobia in people’s faces”, “ever-more insidious attacks on the trade union movement and all working people” , “heartless racist exploitation of people’s fears” and leading a “benighted attempt at a government”.

He wound up with the plaintive cry of a loser: “Give us our country back”.

Sorry Senator, it was never your country. We had an election last year and the Abbott government was elected with a whopping majority. The twitterati might have gone weak at the knees for Ludlum but he might as well have been howling at the moon…..

Ms. Devine even invented a Ludlum quote “Give us our country back”  which isn't in the Senate speech she attacks. What Senator Ludlum said was We want our country back. Sloppy journalism at its best.

Fred Perring gets called on his colourful anecdotal information

In which resident far-right buffoon and frequent letters correspondent Fred Perring gets ‘owned’ by a Yamba resident…….

Letter to the Editor, The Daily Examiner, 14 March 2014:

A dog's breakfast

Normally I enjoy Fred Perring's contributions, but his efforts published on Monday, March 10, in your paper left me with the feeling that women, in particular, were demeaned.

To make matters worse, I have heard similar stories before. Are you sure you were really there, Fred?

If I shut my eyes I can visualise Fred's next letter to you. In this, he will swear that what he has said was true, perhaps he will "gild the lily" even more by stating that the girl he says he saw sharing an ice cream with her dog was later seen piddling on telegraph posts and chasing motor cars down the street.

Allan Townsend

Yamba

The Lies Abbott Tells - Part Fourteen

THE WILFULLY IGNORANT LIE

QUESTION:

Prime Minister, lastly, there’s a big rally today in Sydney against your Government. Do you have anything to say to those protesters today?

PRIME MINISTER:

Well, my understanding is that the only big rally in Sydney is the St Patrick's Day parade. That’s the big event - to be sure - in Sydney today and I wish all the St Patrick's Day revellers well and if their parade is rained on, there’s always some Guinness available somewhere around the city.

[Australian Prime Minister Tony Abbott answering a question about March In March 2014 at a joint press conference in Sydney on 16 March 2014]

THE FACTS

March In March 2014 had been widely advertised since January 2014 on Facebook and elsewhere.

Twitter had displayed an almost continuous stream of #marchinmarch tweets prior to and on the actual protest days and, first as opposition leader and then as prime minister, Tony Abbott has maintained an active Twitter account/presence.

The Canberra Times newspaper was reporting on the event as early as 4 February and The Australian newspaper by 8 February.

On 16 March 2014 the number of Sydney protest marchers was estimated by various sources as between 10,000 to 30,000 people.

Journalist Richard Chirgwin tweeted that it took marchers 30 minutes to pass the point at which he watched the Sydney march. His short video of people gathered in Belmore Park is at http://twitpic.com/dygkbl.

The Sydney Morning Herald online 16 March 2014: Sydney March In March

 Across Australia it is estimated that over 80,000 people marched.

ABC News online storified this national protest in pictures.

Under Tony Abbott's government the military are crossing a dangerous line

News.com.au 14 March 2014:

AUSTRALIA’S top ranking officer, Defence Chief General David Hurley, has warned Tasmanian Senator-elect and former soldier Jacqui Lambie against using the media to criticise the military.

In an unprecedented political intervention by a serving military officer, General Hurley wrote to the Palmer United Party Senator-elect after she issued a media release alleging that abuse was an “intractable problem” in the forces.

The 10-year army veteran has demanded the government extend the Defence Abuse Response Taskforce (DART) indefinitely to enable all those affected by abuse to come forward.

“It’s clear from information that’s become public and information I’ve received privately that abuse, including sexual abuse in Australia’s Defence Force is an intractable problem, which is far more serious than most people would have realised,” her media release said.

She also said that a high level and “poisonous” culture of cover-up within Defence had stopped abuse victims from speaking out.

In his unsolicited letter, General Hurley said he was alarmed by Ms Lambie’s use of emotive language to make accusations against senior military officers.

“I encourage you in future to provide me an opportunity to address any matters of concern you may have rather than becoming aware of them through a media release,” he said.

“Such an approach will go a long way to building a productive relationship between you and the ADF when you assume your position in the Senate.”…..

#MyBroadbandvReality: turning an online survey into an effective political tool

On 20 February 2014 blogger and tweeter Noely Neate posted an online survey which sought readers views on their own broadband connections.

Clever Noely just didn’t tell the blogosphere and twitterverse about the survey results – she, along with Paul Davis, Pascal Grosvenor, Caitlin Neate and others, turned these results into an effective political tool which contained the voices of over 800 Australians.

What the survey revealed about the New South Wales broadband experience:

Credit: Paul Davis @davispg

Other state and territory graphs can be found here.

It wasn’t too long before this move began to be noticed by the political caste in Canberra:

Transcript extract from Senate Select Committee public hearing, Sydney NSW,12 March 2013

Along the way Noely et al demonstrated to the Senate Select Committee on the National Broadband Network that the Internet is not just used for downloading movies, playing games or looking at funny cat videos and, that ordinary people across the country use it in increasingly sophisticated ways:

In fact this submission was collaboratively edited across three time zones, two continents, in real time: Paul’s in Tokyo, Pascal’s in Sydney, and Cait and Noely in QLD, with other collaborators from across Australia assisting with reviews; collaborative creation made possible by using cloud-based Google technologies. This submission is an example of productivity gains through availability of Broadband, noting Noely’s broadband connection dropped numerous times during this process.

The submission (No 52):

#MyBroadbandvReality (PDF 2833 KB)  Attachment 1 (PDF 1054 KB)