Federal Finance Minister Mathias Cormann has confirmed the Abbott government has frozen temporarily a controversial rollback of Labor’s financial advice laws.
The opposition says while the decision is a step in the right direction it highlights a “botched” process.
The government has decided to wait until Senator Cormann consults with all relevant stakeholders “before pressing the go button” on changes to Future of Financial Advice laws (FOFA).
“We remain committed to implement the improvements to FOFA which we took to the last election as soon as possible,” the minister told AAP on Monday.
Senator Cormann has taken charge of the issue after Assistant Treasurer Arthur Sinodinos stepped down last week pending his appearance as a witness before two anti-corruption inquiries in NSW.
Labor says the government should be dropping its changes rather than temporarily freezing them.
“This has been a botched process,” shadow treasurer Chris Bowen told reporters in Canberra, adding the changes were poorly designed and badly implemented.
The changes have divided the industry, with the Financial Planning Association strongly opposing the payment of commissions under the general advice exemption proposed by the government.
It described the change as a retrograde step that would open the door to mis-selling and inappropriate advice.
Senator Cormann said some of the misinformation about the changes was deliberate and mischievous.
“We are not proposing to get rid of the requirement that financial advisers act in the best interest of their clients,” he said.
Nor was the government proposing to reintroduce commissions or other conflicted remuneration structures for financial advisers providing personal advice.
Senator Cormann said Labor’s laws had cost the industry in excess of $1 billion, with ongoing annual costs of more than $350 million.