You web browser may not be properly supported. To use this site and all its features we recommend using the latest versions of Chrome, Safari or Firefox

Australia was not the only country to critically review the regulation of its financial advice industry in the wake of the global financial crisis.

The US Wall Street Reform and Consumer Protection Act of 2010 is commonly described as having brought about the most far reaching financial market regulatory reforms since the Great Depression. Not only does the Act require all US investment advisors to be registered (and therefore subject to regulation) but it allows the regulatory body to impose a fiduciary duty on stockbrokers. US investment advisors providing personal advice already operate subject to a fiduciary duty. US government guidance to advisors explains that “you have a fundamental obligation to act in the best interests of your clients and to provide investment advice in your clients’ best interests”.

Despite the substantial financial losses in Australia of life savings following the GFC, the federal government had its mind firmly set on watering down the recently enshrined general “best interests” obligation.

The proposed winding back of the relatively new consumer protection laws was of real concern to the industry and consumers alike.

Slater and Gordon has acted for many investors who have suffered devastating financial losses associated with inappropriate advice. Conservative investors or retirees who had invested in collapsed managed investment schemes such as LM Investments and in tax effective investments such as Timbercorp and geared investment strategies are just some of the common situations we have seen.

While the financial advice industry has been regulated in Australia for decades in different ways, our experience is that inappropriate financial advice continues to impact on investors. Consumer protection reforms should remain in place until the financial advice industry can show that it is able to provide objective investment advice that is in the consumer’s interests - particularly in circumstances where ordinary Australians implicitly seek and rely on professional advice to protect their financial future.

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

Thank you for your feedback.

Related blog posts

Consumer and the Law
Liar loans: how mortgage brokers are putting clients at risk

The term ‘liar loans’ has been coined on the back of the Banking Royal Commission. This is because studies have shown almost 40 per cent of loan applications completed through mortgage brokers contained at least one factually incorrect statement. Whether mortgage brokers are providing lenders with incorrect information, or information that is out-of-date, they are putting themselves – and their clients – at risk. A recent study conducted by the Consumer Credit Legal Centre in New South Wales identified some mortgage brokers were breaking the law when filling out loan applications for their clients. Common examples included brokers suggesting their clients provide a different answer...

Planning desk close up documentresize
Consumer and the Law
How to lodge a complaint with Australian Financial Complaints Authority

The Australian Financial Complaints Authority (AFCA) acts as the middleperson between financial firms and consumers or small businesses, offering free and independent dispute resolution services. It deals with complaints about financial advice, insurance, banking and superannuation products and services. While the time limit to lodge a complaint to AFCA is usually between two and six years, the Australian Government recently created the opportunity for those with complaints up to 10 years old to come forward. This means consumers and small businesses have until 30 June 2020 to lodge complaints dating back to 1 January 2008. To lodge a complaint, you must follow AFCA’s process. It is...

How to lodge a complaint with Australian Financial Complaints Authority
Business Law
Proposed Changes to the Franchising Code of Conduct

Franchising is big business in Australia, with approximately 1,120 franchise systems and 79,000 franchise units operating nationally1. As franchising is a diverse sector with characteristics that are unique from other business models, franchises are governed by a mandatory Franchising Code of Conduct (Franchising Code).2 The Parliamentary Joint Committee on Corporations and Financial Services recently completed an inquiry into the operation and effectiveness of the Franchising Code and has released the Fairness in Franchising Report (Report).3 Some of the key findings and recommendations of the report are discussed below. The Committee recommends that the Australian Government establish an...

Waitress In Black Apron Upload

We're here to help

Start your online claim check now. Or, if you have a question, get in touch with our team.