Government to delay Future of Financial Advice overhaul after Arthur Sinodinos stands aside

Updated

The Federal Government has frozen plans to change financial advice rules, which until recently were being pushed by former minister Arthur Sinodinos.

The changes to the Future of Financial Advice (FOFA) legislation would eventually remove a catch-all clause stipulating that financial advisers must act in the best interests of their client.

Consumer groups, industry superannuation funds and the Financial Planning Association have raised concerns the changes could see call-centre workers and bank tellers receive commissions for giving general financial advice.

In a statement, Finance Minister Mathias Cormann says he has decided to delay the process.

"I have decided to pause the process on the FOFA regulation for the time being to enable me to consult in good faith with all relevant stakeholders before pressing the go button on our changes," he said.

"We remain committed to implement the improvements to FOFA which we took to the last election as soon as possible."

Senator Cormann yesterday wrote an opinion piece in the Financial Review defending the planned changes, despite the decision to halt the process being made last Friday.

The Government introduced the proposed changes to Parliament last Wednesday as part of its red tape repeal measures.

It has argued the changes would make financial advice cheaper, but Labor and the Greens argue they will strip away consumer protections.

Opposition treasury spokesman Chris Bowen says it was a botched process.

"If this is some sort of stunt to get through the West Australian by-election and then after the by-election we see the same reforms back on the table, well we won't be standing for that," he said.

Senator Sinodinos stepped aside as assistant treasurer last week because of a corruption inquiry into a company of which he was the chairman.

Senator Cormann will act in the role until the inquiry into Australian Water Holdings finishes.

The company is linked to disgraced Labor figure Eddie Obeid.

Senator Sinodinos and his Liberal colleagues maintain the inquiry will find he has done nothing wrong.

Topics: consumer-finance, business-economics-and-finance, industry, regulation, federal-government, australia

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