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Financial Advice Deforms

The previous government’s reforms obliged financial advisers to act in the best interests of their clients and to disclose the fees they received for that advice. The so-called reforms promoted by Assistant Treasurer Arthur Sinodinos seek to turn back the clock on the pretext of saving compliance costs and simplifying regulations which would make things easier for financial advisers. Removing the requirement for scaled advice may sound harmless. But remember that scaled advice means advice taking into account the specific needs of the person being advised. Remove that requirement and a financial adviser is free to give the sort of general advice that you might hear on a good radio program but does not necessarilly take the client’s personal circumstances into account. Even worse the Sinodinos ‘reforms’ remove the so-called catch-all provision that an advisor must act in the best interest of the client. Perhaps we should call the government’s desired changes ‘deforms’ rather than ‘reforms’.

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