Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

I am pleased to respond to the Minister for Financial Services, Superannuation and Corporate Law’s statement today on the topic of financial advice and the government’s supposed intent to remove conflicts of interest in providing that advice. I am pleased to respond because it gives me the opportunity to correct the minister on many of the statements he has made today. As with everything this minister does, there is a massive gap between his rhetoric and the reality of policy outcomes.

The minister argues that the coalition support investors receiving financial advice that may not be in their best interests. This is a complete misrepresentation of the statements made by the coalition, and nothing could be further from the truth. The coalition support efforts to minimise the potential for conflicts of interest within the financial advisory industry. We have previously stated that trailing commissions which do not provide the investor with an opportunity to opt out should be removed from the industry, and payments made by product manufacturers to advisers must in fact be for the provision of advice and not merely an income stream for the adviser. However, the coalition have expressed concerns about how the Rudd Labor government’s intent with this legislation could hurt small business financial planners and could impact on the ability of low-income earners to receive financial advice.

As I said, we have expressed concerns about the massive gap between what the minister says and what the minister actually does. With much fanfare, Minister Bowen announced on 26 April on Sky News:

…  the key change has been the banning of commissions and payments from financial providers to financial advisers.

That was shortly before some of the details were released by the minister, on the same day. Those details were under the heading ‘Overhaul of financial advice’ and clearly state:

It is important to note that the—

reform—

does not prevent client-agreed deductions being allowed from a client’s investment to pay for financial advice or flexibility in payment options.

The minister did not explain in his statement today how a payment can be made out of a client’s investment if it has not originated from a product provider.

The reforms will not completely meet the minister’s promise to Ross Greenwood on 26 April. He said of the reforms:

… they’ll stop people getting advice to invest in bad products which happen to be in the best interests of advisers but are clearly not in the best interests of ordinary mum and dad investors.

By suggesting that all commissions offer advice not in the interests of investors, the minister is making an attack on the financial planning industry, particularly small businesses involved in that industry. My office has been flooded with inquiries from small business financial planners who are concerned that they will not be able to offer services to mum and dad investors into the future and that these reforms have the potential to force a complete restructuring of their business or in fact force them out of business. But this minister is not concerned about the jobs that are going to be lost. In fact, he has admitted that the reforms will destroy jobs in financial planning. The minister said on 26 April, in a press conference:

I recognise that some people won’t be happy with these reforms. I accept that some people will leave the financial planning industry as a result …

A survey conducted by Radar Results, which is a consulting firm to financial planners, found that one in four financial planners are considering leaving the industry as a result of these reforms. So the minister is perfectly happy for, potentially, 25 per cent of the employees in the financial services industry to lose their jobs as a result of the reforms.

However, there is some hope because, despite threatening to take their jobs away, the minister for financial services is consulting with the industry! We have heard a bit about consultation lately. So the minister is telling us he is consulting with industry—just like they consulted with industry on the great big new tax on mining! But even the minister himself recognised that he did not have the details right. He told 2GB on 26 April that the reform proposals ‘will need a lot of work; we’ll need to consult’. It sounds very familiar, ‘a lot of work’. In order to consult, Labor are providing information sessions in capital cities from 25 June to 1 July. So we have a one-week intensive consultation session at the end of the financial year. Financial planners are pretty busy at the end of the financial year. How can the government be taking the views of small business financial planners seriously when they arrange a consultation period for the last week of the financial year?

This is a minister who dismissed details of consultations with the Association of Financial Planners in a press release on 4 June, saying they were ‘based on newspaper headlines rather than the facts’. This is a minister who promised in May 2008, in relation to another of his failed policies, Fuelwatch:

Fuelwatch brings down petrol prices, puts downward pressure on petrol prices …

There is a credibility problem with this minister. This is the man who introduced Fuelwatch, which was originally going to save us money on petrol but then became just a medium for more information on fuel. Then we had GROCERYchoice, which was going to provide us with cheaper groceries—but you might have to drive 2½ thousand kilometres to get a packet of Tim Tams in order to save money. So we have a minister who has a bit of a credibility problem. He has a problem because there is a massive gap between his rhetoric and his delivery.

The coalition will be watching very carefully the way these reforms are implemented, because this government has a track record of poor implementation. They could not build school halls cost-effectively, they could not give away pink batts and there are a lot of financial planners out there who are concerned that the government cannot reform this industry without causing massive damage to small business.

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