ASIC launches action against Astra; FOFA changes hit consumers with $7.5b in extra costs: Midday Roundup

The Australian Securities and Investments Commission has begun legal action against mining giant Astra Resources and its directors over $7.6 million it says was illegally raised from almost 300 Australian investors between September 2011 and September 2012.

ASIC is alleging Astra Resources did not provide documents to investors to give them all the information they needed to make an informed decision about whether or not to purchase shares.

As a part of the legal action, ASIC has written to Astra shareholders advising them it is pursuing orders to have their share purchase contracts set aside, which could pave the way for claims for refunds and damages, reports The Australian.

Aussies hit with $7.5b in extra costs due to FOFA Changes

Changes to the Future of Financial Advice laws could cost consumers more than $530 million a year in increased fees and charges, according to a report published today.

The report from Rice Warner says the reintroduction of commissions and other conflicted payments could hit consumers with a staggering $7.5 billion of extra costs over 14 years.

It also debunks the claims by banks and financial planners that diluting consumer protections will reduce the cost of advice.

Industry Super Australia chief executive David Whiteley said in a statement the multi-billion dollar impact explains the relentless lobbying by the banks and financial planners to reduce consumer protections.

“The reality is that cutting consumer protections just increases commissions and fees paid to financial planners to sell bank products.”

“It would seem that the banks’ objective is to be able to sell compulsory super and other products through financial planners and other staff, rather than provide Australians with the impartial financial advice that they want, need and deserve,” he said.

Shares up on open

Wall St rebounded strongly from Tuesday’s selloff to close on a high yesterday, as Aussie shares flowed suit this morning.

The S&P/ASX200 benchmark was up 49 points to 5473.6 points at 11.50am AEST. On Wednesday, the Dow Jones closed 158.75 points higher, up 0.97% to 16533.1 points.