A ragtag gang of crossbench and Opposition senators are attempting to ambush the Abbott Government by scuttling hard-won changes to regulations governing financial advice.

Senator Nick Xenophon fronted the media this morning to announce he had convinced Palmer United Party splitter Jacqui Lambie and the Motoring Enthusiast Party Senator Ricky Muir to vote with him to undermine the changes, known as the Future of Financial Advice (FOFA).

The self-titled “coalition of common sense” is made up of independents and senators from Labor, The Greens, PUP, and the Motoring Enthusiast Party. They say that reversing the changes will protect consumers from unscrupulous financial advisers.

• What is FOFA? Read this guide
• Click here to read about when FOFA passed the Senate the first time

The Labor party has successfully moved a motion to suspend standing orders in the Senate, to allow a debate on the reforms to commence. Remarkably, the motion was supported by PUP senators Dio Wang and Glenn Lazarus, as well as Senators Muir and Lambie.

Their support was added to that of the Opposition, the Greens, and independent senators John Madigan and Nick Xenophon, who have long opposed FOFA.

Treasurer Joe Hockey was blindsided on Wednesday morning when a Melbourne radio host broke news of the political ambush to him live on air.

“Well, you know, that’s news to me. If they’re doing that, they don’t understand that that sort of behaviour just creates uncertainty for financial advisors and others,” Mr Hockey said.

When asked by ABC Melbourne radio host Jon Faine if the reforms make things worse for victims of financial fraud, Mr Hockey replied: “Well, that’s a silly statement, and an uninformed statement.”

“The bottom line is, we are trying to deliver simplicity… [and] fairness.”

In the Senate, Finance Minister Mathias Cormann slammed the ambush as a political machination brought about by the trade union movement for its vested interests, and complained that the PUP and Ricky Muir have broken their promise.

“The Labor party is the political arm of the commercial arm of the trade union movement. This is not the way to deal with it,” Mr Cormann said.

“It is very disappointing for the government. Good public policy is now, sadly, getting caught up in internal fighting.”

Without the regulations, financial advice reforms passed with PUP support will not take effect, forcing the government to renegotiate the FOFA deal.

Mr Xenophon told the media before the vote that the bloc had banded together as part of a “coalition of common sense”.

“It is particularly pleasing that Senators Lambie and Muir have listened to the concerns of consumers and particularly victims to come to this position. Our common unequivocal objective is to have the government’s financial advice regulations disallowed today in the Senate. Because they unambiguously bad for consumers.”

This is a change of heart for former Palmer United Party deputy leader Jacqui Lambie, and will further embarrass her party’s leader Clive Palmer. Mr Palmer has declared his support for FOFA after the government agreed to his demands for a slight amendment.

The New Daily can reveal that in the past month Senator Lambie has canvassed the views of consumer advocates and financial industry bodies to determine what the likely impact of the Government’s reforms would be.

At the press conference, Ms Lambie — who has removed all PUP insignia from her website — told reporters she regrets her initial decision to support the changes.

“I told Clive Palmer I had reservations. I believe we allowed it to be watered down,” Ms Lambie said.

“[S]ometimes when you make it wrong you have to go back in and make it right.”

Tensions have been rising between Mr Palmer and his former deputy.

Senator Lambie said in recent days that she wished she had run at the last election as an independent and that Mr Palmer needs to “suck it up”. In response, Mr Palmer demoted her. All mention of Ms Lambie has also been removed from the PUP website.

Senator Muir, who signed an agreement to vote with PUP, also voted to pass the original FOFA law in July.

Mr Xenophon said the turning point for his colleagues was a Senate hearing last week that revealed the impact the law could have on ordinary Australians.

Consumers groups have widely condemned FOFA as watering down protections against unscrupulous financial advisors.