Who does the financial media represent? You, the investing public. Right?
Wrong. The financial media tends to serve the interests of the banks, brokers and intermediaries whose job it is to stick you into investments where neither the risks nor extortionate fees are ever explained in plain language.
Too harsh? How else to explain the AFR’s bland and uncritical reporting of the federal government’s gutting of the future of financial advice (FOFA) reforms enacted by the former government to protect the public against shonks and salesmen masquerading as advisers.
Thank goodness for Crikey’s Bernard Keane, who is one of the few journalists to see the unwinding of FOFA for what it is – a cynical move (sneaked out just before Christmas) by a government putting the interests of its traditional constituency ahead of the general public.
The changes essentially water down reforms that enshrined a duty by advisers to put their clients’ interests first. They also canned a requirement that clients opt-in to the charging of ongoing fees and trails that can leak from their accounts for years. Apparently, this was all too hard. (Can you imagine any other industry or profession continuing to charge its customers without seeking their assent?)
Even many professional and independent advisers untied to the banks are aghast at the changes, seeing them as setting the industry back just as it was adopting professional standards and ridding itself of the conflicts of interest that had reduced advice to a product flog. (Disclosure: in my professional role, I work with non-aligned advisers). This is how Simon Hoyle, editor of Professional Planner magazine described the undoing of the reforms:
“The industry hasn’t just shot itself in the foot, it may have shot itself in the head. It was given a chance to look the public in the eye and say: ‘We are professionals; we deserve your trust and respect; we’ll place your well being above all else; and you don’t even have to take our word for it, it’s what the law says we must do. You know, like other professions do. It had that chance and, frankly, it squibbed it. It looked at the hard yards that it would take to transform the public’s perception and it said, no, sorry, that’s not for us. It’s too hard. We’d rather look after ourselves. We’d rather be regarded as fund management distributors and salespeople than as professional service providers.”
Hoyle’s editorial was a rare voice for the consumer in all the fawning trade press coverage of the FOFA unwind, much of which was singing from the industry’s songbook.
But this isn’t about “restoring the balance” or “improving efficiency” or “cutting red tape” or any of the other euphemisms which serve to hide the selective preservation of the “entitlement culture” the federal government claims to want to eradicate.
This is about putting the interests of the thousands of Australians, many elderly and of limited means, second to the banks and retail funds. These Australians were fleeced in a series of scandals in the past decade, most notoriously by Storm Financial , a Townsville planning firm that, in concert with the banks, leveraged up unsophisticated elderly investors into hugely risky investments and charged them big fees for doing so.
The victims of that scandal later made a documentary about their experiences. Have a look at this and ask yourself “who is looking after these people in Canberra?” And which of the big media publishers (who so proudly claim to represent the ‘battlers’) will ensure their interests are protected as the hard fought reforms of recent years are undone?