MEDIA RELEASE: Removing ban on commissions for financial advice bad for older Australians

Australia’s peak seniors advocacy organisation, COTA Australia, joins today with other consumer interest groups such as Choice to warn a Senate Inquiry about the detrimental impact of the proposed amendments to Future of Financial Advice (FOFA) legislation on tens of thousands of older Australians.

Sound financial advice that puts the interest of the consumer first is more important than ever given changes to the pension age announced in the recent Federal Budget, and political debate on raising the superannuation preservation age and other changes.

Ian Yates, Chief Executive of COTA Australia, and National Policy Manager, Jo Root, will appear at the FOFA Hearing of the Senate Economics Committee in Canberra today. They will tell the hearing that retirees need professional, independent financial advice as they have no opportunity to recoup lost investments or assets when financial advisors are swayed by commissions rather than advising on the best outcome for clients.

“The proposed changes remove important safeguards which were put in place following the disasters of Storm Financial and West Point to stop inappropriate products being sold to vulnerable community members,” Mr Yates said.

“Just as important as those headline-grabbing financial failures are the day-to-day problems and losses when people don’t get the best advice possible about their hard-earned retirement savings.

“Weakening these safeguards removes important protections and the recourse for consumers against advisors or salespeople who choose to exploit the loopholes these changes would create.

“Australia needs a robust independent financial planning and advice industry to make sure that retirees can get the best possible advice on the optimum management of their retirement savings.

“There is much uncertainty facing this and the next generation of retirees as they make arrangements for the financial security to live as active and as healthy as possible in their retirement years.

“As it stands, this package of financial reforms cannot be said to be in the best interests of older people.
“COTA believes older Australians would be best served by a ban on all commissions or third party payments to all financial advisors and financial product sales, and ensuring that scaled advice is fully subject to strict best interest protections.

“This will restore trust in financial advice and ensure consumers are getting quality, independent, untainted advice,” Mr Yates said.

Media contact: Ian Yates 0418 835 439, Olivia Greentree 0439 411 774.

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