The public spat dividing the Palmer United Party (PUP) has the potential to make life very difficult for the government, as it discovered when its financial advice reforms suffered a mortal blow at the hands of a new power bloc in the Senate.

PUP Senator Jacqui Lambie, Senator Ricky Muir, Senator John Madigan and Senator Nick Xenophon announced they united to oppose the laws, with support from Labor and the Greens.

The announcement came on the same day Ms Lambie was removed as deputy PUP Senate leader and deputy whip of the party for failing to attend three party meetings this week.

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Mr Xenophon held a press conference to explain the decision to vote against the financial advice laws.

He was flanked by Labor’s Sam Dastyari, Greens senator Peter Whish-Wilson and senators Madigan, Lambie and Muir, who has previously formed an alliance with PUP.

“Despite our political differences, we have banded together as a coalition of common sense,” Mr Xenophon said.

Happier times: Jacqui Lambie (L) with party leader Clive Palmer.

“Our common, unequivocal objective is to have the Government’s FoFA regulations disallowed today in the Senate because they are unambiguously bad for consumers.”

Mr Xenophon noted that Ms Lambie and Mr Muir had shifted their position on the FoFA issue.

Aside from diminishing the power of PUP, which falls from three senate votes to two, the government must now negotiate with a larger bloc of independent senators who have a broader range of interests.

Trouble for the PM

The government needs support for its legislation from six of the eight independent and PUP senators if they are being opposed by Labor and the Greens. Now the government must find those numbers among the non PUP senators, which today added another member in Ms Lambie.

The government has billions of dollars of budget savings stalled in the senate, and this new alliance will complicate the process of getting those measures and other parts of its legislative agenda through.

Palmer United parting ways?

Clive Palmer said he had demoted Ms Lambie until the outspoken senator “gets her life back together”.

But the Palmer United Party leader hopes the pair can soon reconcile their differences.

Ms Lambie, who has been engaged in a war of words with Mr Palmer, has dropped the PUP name and logo from her website.

There were fiery scenes in the Senate when the disallowance motion was introduced, with Finance Minister Mathias Cormann accusing Labor and the Greens of “holding a gun to the government’s head” and dealing with the issue in a reckless and irresponsible manner.

“Whatever you think about the legislation in substance, the regulation has been the law of the land for four months,” he told the Senate.

“You gave notice at 7pm last night that you wanted to get rid of those regulations today but there’s no need to deal with this today.

“This can actually be dealt with by 27 November next week so we could let this lie on the table and continue the conversation.”

Mr Dastyari told the Chamber protecting consumers and the victims of financial crime should be the Senate’s priority.

“There’s a reason why every single consumer and advocacy group in this country believes these are bad laws, that these are bad regulations and that these should not be supported,” he said.

“These regulations are a wish list for power brokers in the industry.”

-with ABC