The Abbott Government will press ahead with weakening finance laws despite the corporate regulator saying it has just 30 staff to police the nation’s 40,000 financial advisers.
In the wake of a bipartisan Senate committee backing a royal commission into the Australian Securities and Investments Commission and the Commonwealth Bank, the Government is intent on making regulations that opponents claim will hurt ordinary consumers by $ 500 million a year.
The Government wants to overhaul Future of Financial Advice laws, claiming the changes will cut red tape costs by $ 200 million a year.
There is much doubt the changes, which cover advice, commissions and requirements to provide continuing information, will get support in the Senate.
So, to “provide clarity and certainty” to the financial sector, the Government will regulate a series of changes by Tuesday.
The move comes after this week’s Senate committee report that argued it could not trust ASIC to properly supervise the financial advice industry and argued the Commonwealth had sought to cover up the actions of its own advisers.
Finance Minister Mathias Cormann said the events covered by the Senate committee occurred “some time in the past”, suggesting the financial services inquiry headed by former Commonwealth Bank chief executive David Murray was better placed to look at the issues than a royal commission.
He said the regulatory changes proposed by the Government were aimed at helping consumers while cutting costs for business.
ASIC chief Greg Medcraft, who said a royal commission would divert the authority’s limited resources, urged advisers to lift their game.
But he also revealed that ASIC, which had its funding cut by $ 120 million in the Budget, has just 30 staff to keep the nation’s 40,000 financial advisers in check. Shadow treasurer Chris Bowen said ASIC did not have the resources to properly protect consumers, especially in the face of the coming FOFA changes.
National Seniors chief executive Michael O’Neill said he was stunned the Government would try to regulate the FOFA changes despite strong consumer opposition to them.
He has written to the heads of the NAB, ANZ, Commonwealth and Westpac banks urging them to publicly call on the Government to not proceed with its FOFA changes.