I rise today to speak in defence of investors in my community currently protected by Labor's Future of Financial Advice, or FoFA, reforms. These reforms were brought in by Labor to protect investors from dodgy advice and vested interest within the financial services industry. Since 2006 there have been more than $6 billion worth of financial advice collapses, affecting more than 120,000 Australians.
The former federal Labor government saw the need to act, and so it did. After a number of parliamentary inquiries it was clear that, when financial advisers were not compelled to act in the interests of investors, unsound advice was given in pursuit of commissions. This resulted not only in people losing their entire savings but entire companies collapsing due to a poisonous mix of conflicting interests.
According to the Australian Financial Review, analysis by Rice Warner actuaries estimates that a repeal of FoFA will cost consumers twice as much as the actual cost of FoFA to the industry over the next 15 years. The FoFA reforms were introduced by the former Labor government to reduce the risks of another Storm Financial, Opes Prime or Westpoint collapse. This is policy on the run from the Abbott government and a poorly thought out attempt to please its backers in sections of the financial sector.
To use John Howard's words, this is a 'barbecue stopper'. It certainly stopped the barbecue I attended on Saturday night. People were aghast. I spoke to many who felt that, when they truly needed to get specific financial advice for their superannuation, they were feeling threatened by the fact that the advisers would not have to act in their interests.