CA ANZ backs government’s proposed consumer protection reforms

Chartered Accountants Australia and New Zealand (CA ANZ) has expressed its support for the Australian Government’s proposed consumer protection reforms.

CA ANZ referred to the proposals as a “significant response” to shortcomings across the superannuation, financial advice and investment industries.

The push for reform comes in the wake of the Shield and First Guardian Master funds collapse, which impacted nearly 12,000 Australians and wiped out roughly A$1bn ($716m) in retirement savings.

CA ANZ Advocacy, Public and Government Affairs group executive Damian Ogden said: “The Shield and First Guardian collapses demonstrate the devastating consequences when failures occur at several points across the financial services system. 

“Consumers need effective protections before their retirement savings are transferred into unsuitable, high-risk or poorly governed investments.”

The organisation said it supports the government’s measures to reinforce protections for superannuation members, tighten scrutiny of self-managed super funds (SMSFs), curb damaging lead generation tactics and raise standards for investment products.

Ogden added: “Stopping harmful conduct at its earliest point is preferable to trying to compensate consumers after their savings have been lost.

“Any new rules should be clear, enforceable and focused on the business models and practices that create genuine consumer harm.”

CA ANZ also voiced support for financial advice reforms that are already under way, including the proposed New Class of Adviser. However, it argued the scope should widen to let suitably qualified accountants deliver non-product financial advice.

“Accountants are often the first trusted professional Australians turn to when making important financial decisions,” Ogden said.

CA ANZ also backed efforts to bolster the Compensation Scheme of Last Resort (CSLR), although it flagged unease over the fact that most SMSFs would be obliged to pay into the scheme despite having no entitlement to claim from it.

The CSLR functions as a fallback for consumers who cannot secure compensation ordered through the Australian Financial Complaints Authority when a financial services provider fails, it said.

The broader reform package also includes changes for managed investment schemes (MIS), including new reporting obligations by the Australian Securities and Investments Commission. CA ANZ noted that further work is still required to properly regulate this sector.

CA ANZ recently proposed a five-point reform to improve Australian auditing quality, oversight and accountability.