Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

by leave—I move opposition amendments (1) to (8) and (15) to (21) together:

(1) Clause 2, page 2 (table item 2), omit the item, substitute:

(2) Schedule 1, item 10, page 5 (line 14), omit the definition of renewal notice.

(3) Schedule 1, item 10, page 5 (line 15), omit the definition of renewal notice day.

(4) Schedule 1, item 10, page 5 (line 16), omit the definition of renewal period.

(5) Schedule 1, item 10, page 8 (line 20), omit "Termination, disclosure and renewal", substitute "Termination and disclosure".

(6) Schedule 1, item 10, page 9 (line 17), omit "or section 962K (the renewal notice obligation)".

(7) Schedule 1, item 10, page 9 (lines 23 and 24), omit "or section 962K".

(8) Schedule 1, item 10, page 9 (line 26), omit "or section 962K".

(15) Schedule 1, item 10, page 11 (line 17) to page 12 (line 29), omit sections 962K to 962N.

(16) Schedule 1, item 10, page 13 (lines 13 to 25), omit Subdivision C.

(17) Schedule 1, item 10, page 13 (line 28), before "A person", insert "(1)".

(18) Schedule 1, item 10, page 14 (after line 11), at the end of section 965, add:

(2) Subsection (1) does not apply in relation to a scheme if any part of the scheme was entered into, begun to be carried out, or carried out before the day on which this Part commences.

(19) Schedule 1, item 11, page 14 (lines 16 and 17), omit paragraph (jaad).

(20) Schedule 1, item 12, page 14 (lines 29 and 30), omit subparagraph (1E)(b)(ii).

(21) Schedule 1, item 12, page 14 (line 34), omit "or (ii)".

Amendment (1) ensures that the commencement date of FoFA will be delayed until 1 July 2013, consistent with the proposed start date of the MySuper changes. The current implementation date of 1 July 2012 is plainly ridiculous. It is plainly ridiculous to start it in four months. It has not even gone through the Senate yet. Given FoFA and MySuper involve major changes for the same financial services providers, it would make sense to implement them simultaneously. It is symptomatic of the government's chaotic approach to this area and its lack of understanding of practical business realities that it seeks to impose two different implementation dates involving significant and costly system changes in very quick succession. The minister has informally flagged for some time now that he will agree to a delay of the implementation. Well, he can take this amendment. It is time that he formalises it and gives certainty to the industry. The government should be supporting this amendment.

In relation to amendments (2), (3), (4), (5), (6), (7), (8) and (15), these amendments remove the opt-in provisions from the legislation. Opt-in provisions impose a mandatory requirement on consumers to re-sign contracts with their financial advisers every two years. It was not part of the original Ripoll inquiry recommendations. Where is he? Where is the member for Oxley? There he is. Sorry, I overlooked him—just like the Prime Minister has on a couple of occasions. Out of 407 submissions to the original Ripoll inquiry, only one—the submission from the government's friends in the Industry Super Network—called for the introduction of opt-in provisions. Opt-in provisions impose a significant and unnecessary increase in red tape and costs on both small business financial advisers and consumers. Of course, the member for Lyne does not care about that and nor does the 'member for Tamworth'. They love that red tape for small business and they are going to be party to it.

The government has been unable to point to another example anywhere in the world where a government has sought to impose a mandatory requirement for consumers to re-sign contracts with their financial advisers on a regular basis. As such, by pressing ahead with opt-in provisions at the behest of his friends in the union dominated industry super fund movement, it would appear that the minister is intent on making Australia a world leader in red tape. With the best interests duty in place, appropriate transparency for fees charged and the ongoing capacity for clients of financial advisers to opt out of any advice relationship at any stage, there is adequate consumer protection without the need to impose additional costs and red tape on both businesses and consumers.

My amendments (16), (19), (20) and (21), consistent with the government's approach in its exposure draft released in August last year, ensure that the annual fee disclosure requirements will apply prospectively only and will not apply retrospectively. The Ripoll inquiry made no recommendation to introduce an additional annual fee disclosure statement over and above the current regular statements provided by the financial service product providers to their clients. To impose these additional annual fee disclosure requirements retrospectively to all existing as well as new clients increases costs for no or only little additional consumer protection. Those additional costs will ultimately have to do be borne by the consumer and are obviously not proportionate to any questionable additional protection benefit.

In the FoFA consultation sessions, it was the industry's clear understanding that the government's proposal to impose an additional annual fee disclosure statement be prospective only. That is, it would apply to only new clients and not existing clients. That was also the position advanced by the government in its exposure draft of this legislation released only two or so months earlier. The Financial Services Council estimates that implementation of the fee disclosure requirement will cost approximately $54 per client prospectively—that is for new clients—and $98 per client retrospectively for existing clients. So this is yet another example of the very poor and deeply flawed consultation process engaged in by the government in relation to this. Finally, my proposed amendments (17) and (18) ensure that the antiavoidance provision in the legislation applies prospectively only and does not unintentionally apply the antiavoidance provision retrospectively. The existing provision was introduced with little or no consultation. The coalition amendments correct the issues relating to grandfathering and will ensure that the provisions apply prospectively to avoid any unintended consequences to retrospective— (Time expired)

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