NEWS ANALYSIS COMPILED BY JOHN McNAMEE
Despite the shock waves of the Commonwealth Bank rip-off scandal and other financial disasters still reverberating, the Federal Government has not exactly galloped to the rescue.
Thousands of pensioners are still reeling from the shock of losing millions of dollars of their nest-egg investments due to the slack policing of the financial advice sector.
At least however, the government has made some moves to tighten the standards expected of financial planners so that there are no repeats of the disastrous affairs of last year…but don’t hold your breath.
Nothing much is going to happen for another four years… and maybe that will be too late for many of our elderly investors.
Seniors groups have welcomed the latest report recommending higher education and professional standards for financial advisers … but said the 2019 deadline for compliance was too far away.
The Parliamentary Joint Committee (PJC) Inquiry report wants Australian financial planners to meet tougher professional, ethical and educational standards, including a minimum degree qualification.
And not before time.
The National Seniors organisation said that Australians – particularly those near or in retirement– obviously wanted better qualified financial advisers looking after their hard-earned savings.
“Too many older people have trusted financial advisers who are ill-equipped to steer their retirement funds safely towards reasonable returns,” National Seniors chief executive Michael O’Neill said.
“Other advisers have acted unethically or unprofessionally, and investors have lost everything as a result.
“We don’t want to see another Commonwealth Bank scandal.”
But Mr O’Neill said the PJC’s recommended January 1, 2019 deadline for compliance with the new standards was too far away to bring peace of mind to many seniors.
“People want to know that their advisers are trustworthy and capable now – not in four years time.
“The government and the financial services industry need to impose tighter standards sooner, or risk further destroying the confidence of the very people from whom they make a living.
“Advisers have an important role to play but that relies overwhelmingly on confidence amongst customers.
“Confidence has been destroyed and will only be rebuilt with a much greater sense of urgency than a 2019 deadline for compliance with new standards offers.”
The PJC’s recommendations also include:
- The term ‘general advice’ in the Corporations Act 2001 be replaced with the term ‘product sales information’ to better reflect the nature of that information.
- ASIC should only list a financial adviser on its register when they have completed a structured professional year and passed a registration exam set by the Finance Professionals’ Education Council.
- The government require mandatory ongoing professional development for financial advisers set by their professional association in accordance with Professional Standards Councils requirements.
Meanwhile, the latest appointment of new federal ministers to portfolios vital to older Australians was described as “interesting” by the over-50s lobby.
“Areas critical to older Australians – namely health, pensions, retirement savings and financial advice – are now all being covered by three new ministers,” said Mr O’Neill following the reshuffle.
“Despite impressive backgrounds, Scott Morrison and Sussan Ley have little relevant experience in pensions, health and aged care.
“They’re an unknown, and how they plan to handle contentious, unresolved budget changes will define the year ahead,” he said.
New ministers in key seniors-related portfolios include:
- Scott Morrison as Minister for Social Services (formerly Minister for Immigration);
- Sussan Ley as Minister for Health (formerly Assistant Minister for Education with responsibility for childcare);
- Josh Frydenberg as Assistant Treasurer (formerly Parliamentary Secretary to the Prime Minister with responsibility for deregulation)
With high long-term mature age unemployment rates in mind, O’Neill welcomed the Prime Minister’s jobs focus in the reshuffle.
“We’re optimistic that the Prime Minister’s jobs emphasis indicates a commitment to building on the Restart employer wage subsidy introduced for older workers in 2014.
“National Seniors looks forward to working constructively with the new ministers in 2015,” he said.
A report in the Sydney Morning Herald earlier this year stated that only 500 job seekers had joined the Abbott government’s new Restart employment strategy when in fact it was meant to benefit 32,000.
The Hockey Budget last year attempted to encourage employers to hire mature-age Australians.
According to figures quoted in the report, there are nearly 175,000 Australians over 50 looking for work through Job Services Australia.
Employers who hire this age group can expect an incentive payment of $10,000 but with just 510 being taken on, the project looks set to fall 95% short of the government target.
The SMH report also quoted Foreign Minister Julie Bishop, who turns 59 this year, s saying that employers should support the scheme as Australians aged over 60 had a great deal to offer society.
The former Minister for Ageing in the Howard Cabinet said the older age group offered a wealth of wisdom and experience which should be highly valued by employers.
But maybe even this high-powered support won’t boost the much-vaunted Restart programme.
In another development, the seniors lobby was stunned to learn that, due to federal funding cuts, the National Information Centre on Retirement Investments (NICRI) was due to be axed just a few weeks ago.
Commenting on the shock news,Mr O’Neill said: “NICRI is currently the only place older Australians can go for free and truly independent financial information”.
“For years National Seniors has unreservedly recommended NICRI to retirees overwhelmed by the complexity of the system”.
“Recently the Murray Report emphasized the importance of consumer empowerment and fair treatment in a ruthless sales-driven system.”
“We are stunned that this vital consumer service has been axed”.
“Older Australians now have nowhere to go,” he said.
Every year, the little independent, government-funded Canberra-based agency helps thousands of older Australians understand everything from allocated pensions to annuities and funeral bonds.
Meanwhile in Queensland, over 50s groups have named economic management as the number one issue and called on the major parties to come clean on how they will manage the state’s finances in the new term of government.
Mr O’Neill said management of the state’s economy was critical because it provided the foundation for people to live with dignity and certainty, whether in the workplace, in retirement or in their latter years.
“An economy that is managed effectively, with productivity at the forefront and an emphasis on harnessing the skills and experience of all and keeping the cost of government taxes and charges down, is what provides confidence across the whole community.
“There are challenges but those seeking the Treasury benches need to be upfront about how they will deal with them and provide the foundation for the future.”
Mr O’Neill said older Queenslanders living on low and fixed incomes relied on concessions to help deal with state and local government and utility charges.
“They are entitled to certainty about the maintenance or otherwise of such benefits and that depends on the economic management strategy of the party in power.
“If there are to be restrictions or limits on concessions across the term of the government, then the parties need to be upfront now and inform people.
“Job creation for all ages must be a priority and that includes the over 50s. Successive governments have failed to take mature age employment seriously and that is to the detriment of the people concerned, their families and the state economy through the loss in productivity and experience.”
- The author acknowledges the information supplied by National Seniors Australia.