Cormann freezes FoFA changes

ScreenHunter_1789 Mar. 24 16.02

By Leith van Onselen

In a positive development this afternoon, Finance Minister Mathias Cormann has frozen the Government’s proposed wind-back of Labor’s future of financial advice (FoFA) reforms amid heavy criticism from the industry and community. From Chris Joye at The AFR:

Senator Cormann, who took over responsibility for the policy last week, said he wanted to “have a round of conversations with all of the stakeholders first and then go ahead when everybody that was on same page is back on same page”.

“I’ve just got in the job and have decided to pause the process on the FOFA regulation to enable me to consult in good faith with all relevant stakeholders before pressing the go button on our changes”…

This is win for both common sense and consumers. The FoFA reforms were born out of the collapse of Storm Financial and following a landmark parliamentary inquiry and three years of negotiations. To wind them back, and re-introduce commissions and other forms of conflicted remuneration, would have been a retrograde move.

Hopefully, this is merely the first step towards a withdrawal on FoFA by the Coalition.

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  1. Providence seems to have played a major part in this – if not for the Sinodinos corruption probe, most likely this would have had a vastly different outcome.

    Really good to see it thwarted (at this stage).

  2. “Hopefully, this is merely the first step towards a withdrawal on FoFA by the Coalition.”

    I hope so too, but Cormann is giving no indication that it will be.

    “I want to have further conversations with key stakeholders and remind them what they agreed to before the election. I have pressed pause on the regulations – I will press the button again once I am satisfied most people are back on the same page.”

      • You reckon? Abbott gives the impression he’s going to dig his heels in and defend stupid policies to the death. Look paid parental leave.

      • Lorax, a key factor when compared to the PPL is that the old people’s union is now also coming out against the changes. Abbott needs to keep the oldies on side or he’s in real trouble.

      • After your original article on this 5 or 6 weeks ago, I wrote an email to my local MP Lucy Wicks,on the day.
        All I got were platitudes.
        I’ve just emailed them again, sending your article.
        I think MP’s would do well to read Macrobusiness to keep in touch with what goes on.

  3. ceteris paribus

    Every Jo Normal who understands the rollback of consumer protection in financial services seems to think it shonky. And that number is growing with more community education about finance in the media everyday.

    I really can’t understand Abbott getting mixed up in this strategy. There are a lot more voting Jo Normals out there than voting banker mates. It is a politically risky strategy.

    I suppose the other part of the strategy is to give Industry Super a gratuitous poke in the eye. But they could probably knock off sinecures for unionists by new trustee rules rather than being associated with letting the spivs loose.