The successful disallowance of the Federal Government’s amendments to wind-back the original Labor Government’s FoFA reforms has been slammed as having the potential to significantly harm the financial services industry and its consumers.
Steven Münchenberg, Chief Executive Officer of the Australian Bankers’ Association, said it would disrupt the banking and financial services industry and result in bank customers not being able to do their banking transactions as they do now, and have been doing for some time.
“If a motion to disallow the FoFA regulations successfully removes the technical amendments, it will mean banks and other financial services businesses will be at risk of non-compliance with the law.
“Consumers will face a more complex and burdensome banking experience. For example, bank customers might not be able to speak to one bank teller or specialist about a deposit product, general insurance product, consumer credit insurance and loans or credit cards. They might have to speak to multiple staff just to complete their enquiries and transactions – this doesn’t make sense. It will cause customer confusion and frustration and additional compliance complexities and costs for banks.”
David Hasib, a partner at Chan & Naylor wealth planning group, said that the disallowance to the Federal Government’s changes to Labor’s FoFA reforms is a significant set-back for the financial services industry, particularly the independent sector, and the clients which it serves.
“Implementing Labor’s proposed FoFA rules will significantly stifle the financial services industry with the potential to rendering it a basket case on the international stage.”
Hasib believes that the Government’s proposed reforms have inadvertently played into the hands of large institutions and the ever increasing costs associated with FoFA has strangled the independent dealers who have been left with no financial products to supplement their revenue and a growing cost of doing business to manage.
“Should the previously proposed reforms go ahead on 1 July next year then this will make providing financial advice extremely expensive for the consumers, which ultimately will force ordinary Australians to opt for the more affordable but vertically integrated, and ultimately conflicted, advice channel,” he said.