The introduction of legislation to fight the “war on scams” has shown financial advice has further fallen behind the government’s legislative agenda as the public awaits the next draft of the Delivering Better Financial Outcomes legislation.
The government tabled legislation to Parliament on Thursday morning claiming it was “providing the strongest defences against scammers in the world”.
At risk is $50 million worth in fines for noncompliance to the new Scam Prevention Framework, which has been a pet project for Minister for Financial Services Stephen Jones.
“Banks, social media platforms and telecommunications companies face hefty fines if they do not take reasonable steps to prevent, detect, disrupt, respond and report scams and attempted scams in their businesses,” the government announcement, attributed to Minister for Financial Services Stephen Jones and Minister for Communications Michelle Rowland, said.
“Victims will have clear pathways to compensation if the business fails to meet the new standards.”
The law will give powers to the Australian Competition and Consumer Commission to direct businesses to take specific steps to keep their customers safe from scammers, while the Australian Financial Complaints Authority will become the external dispute resolution service.
The law allows the government to employ sector-specific codes which impose mandatory obligations on banks, telecommunication service providers and social media platforms, as well as mandated internal dispute resolution (IDR) mechanisms that are “clear, accessible and transparent” to consumers.
The law will also give the government the power to make rules that set guidance on how to apportion liability at the IDR stage between one or multiple businesses who are at fault.
While legislation tabled to Parliament has beaten out the second tranche of the DBFO, the minister has disputed to this publication previously that both legislative programmes are mutually exclusive, telling the Shape of Advice podcast in July that reforming advice and combatting scams are entwined.
“I’m deeply concerned that Australians are seen by international criminal outfits as wealthy, connected [but] not always sophisticated in their financial decisions and choices and therefore a target,” Jones said, in the first episode of the new season of the Professional Planner Shape of Advice podcast.
And it’s not a totally off-base view., The minister’s motivation to drive professionalism in advice was due to the collapse of Astarra/Trio Capital that saw constituents in his electorate of Whitlam lose millions due to conflicted financial advice.
But while the minister can dispute the war on scams isn’t at odds with reforming the law to improve access and affordability of professional financial advice, the reality is the government is on a tight legislative schedule ahead of an impending election next year and the window to pass new laws is closing fast.
Treasury’s struggles to effectively draft legislation for the DBFO – due to drafting errors as well as fierce opposition to parts of Tranche 1 – has made further delays with the department or the government unable to give a specific timeframe for when the next stage of legislation will be ready.
“[Minister Jones] indicated that he wanted to progress the bill in this term of Parliament and we’re continuing to work to those time frames,” Treasury assistant secretary for advice and investments Andre Moore told Parliament on Wednesday evening.
“The next stage will be an exposure draft legislation, we’re working on developing that.”
