Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Hansard source

I move:

That the amendments be agreed to.

The Corporations Amendment (Future of Financial Advice) Bill 2012 contains a number of vital measures to restore trust and confidence in the financial advice sector, including implementing an advisor-charging regime where advisers are required to obtain their clients agreement to charge ongoing fees, annual disclosure of ongoing fees, a statutory duty to act in the best of the client, and a ban on conflicted remuneration and enhancements to ASIC's capacity to supervise the financial services industry and boost its ability to protect investors.

The government recognises the significance of this legislation for the financial services industry. Amendments to the legislation passed by the Senate will provide more flexible application arrangements for the future of financial advice reforms. Under these amendments, mandatory application of the reforms will occur from 1 July 2013, but entities will have the ability to voluntarily elect to comply from 1 July 2012. The amendments replace the previous application arrangements whereby the reforms were mandatory from 1 July 2012. The amendments go further than those of the opposition and provide more flexibility by giving early industry movers the opportunity to opt in to the reforms.

Amendments (1) to (7) make changes that will ensure the requirements relating to ongoing fee arrangements and fee disclosure statements apply from the date specified in a notice lodged by the financial services licensee with the Australian Securities and Investments Commission. If the licensee does not lodge a notice the requirements will apply from 1 July 2013. Amendment (8) implements the transition arrangements for those who elect to comply with the reforms from a date during the transition period, being 1 July 2012, until 30 June 2013. Amendment (8) sets out the requirement to lodge notice of this election with the Australian Securities and Investments Commission and when notice of this election must be provided to certain clients.

In terms of the amendments to the Corporations Amendment (Further Future of Financial Advice Measures), which I will move shortly, amendment (1) sets out when a notice must be provided to clients impacted by the licensee's election to comply with the reforms from a date during the transition period. Amendments (2) to (10) make changes that will ensure the requirements relating to the best-interest obligations and the ban on conflicted remuneration. Volume based shelf-space fees and asset based fees on borrowed amounts apply from the date specified in the notice lodged by the financial services licensee with the Australian Securities and Investments Commission. If the licensee does not lodge a notice, the requirements will apply from 1 July 2013.

In essence, the government has listened to the concerns from the business and financial planning committee that they need more time to prepare for these changes. The government introduced amendments in the Senate to revise the application arrangements for the reforms. The reforms will still commence from 1 July 2012 but compliance will be voluntary until 1 July 2013, when they will become enforceable against all industry participants. The more flexible timetable balances the needs of industry and consumers, as it gives early industry movers the opportunity to provide commission-free products from 1 July 2012. The amendments will, however, allow licensees to opt in to the reforms early if they are ready to do so before 1 July 2013. The revised implementation arrangements will lower industry implementation costs as they will allow the FoFA and Stronger Super reforms to be synchronised. I commend the amendments to the House.

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