Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

by leave—I am pleased to rise to make some comments in relation to the ASIC oversight report of the Parliamentary Joint Committee on Corporations and Financial Services.I would like to comment, firstly, in relation to the progress being made in relation to the implementation of the Future of Financial Advice package of legislation. As the House would be aware, the Future of Financial Advice legislation purportedly implements the recommendations of the 2009 inquiry of the committee into financial products and services and the role of financial advisers. In fact, it goes well beyond the remit of the recommendations made by that committee and involves a plethora of intrusive, burdensome and complex regulatory measures.

The implementation process is an extremely challenging and expensive one , and the challenges are made greater by the unreasonably short time frames imposed on the financial services sector by the rather chaotic way in which this government has administered the implementation of these new requirements. I note that AMP has estimated that the implementation of these regulatory changes will cost between $60 million and $75 million. AMP stated that it has a team of some 50 people dedicated to that implementation. Across the industry generally, or in totality, it is estimated that the implementation will cost around $700 million and there will be substantial ongoing incremental compliance cost s every year.

The issue is not whether it is desirable that there be a duty imposed on financial advisers to act in the best interests of clients. The coalition have made it clear that we support that principle. The issue that is of concern—certainly to coalition members of the committee—is the complex and burdensome implementation process, which is a process made more complex because of the chaotic way in which it has been administered. The coalition have made it clear that, should we come to government, we will implement all of the 16 recommendations made by coalition members of the committee as part of the committee's inquiry into the FOFA legislation. Those recommendations would include the removal of the so-called opt-in requirement, the simplification and streamlining of the additional annual fee disclosure requirements, improvements to the best interest duty to make its operation clearer and more certain, providing certainty around the provision and availability of scaled advice, and refining the ban on commissions on risk insurance inside superannuation.

As the chair noted, ASIC has stated that it would be conducting road shows later this month designed to seek to explain in greater detail the operation of these changes to the regulatory framework. That is certainly a desirable step but, of course, it is hard to avoid observing that one of the reasons that this is required is the complexity of the new regime and the rushed and chaotic manner in which the new regime has been implemented. It is hardly surprising that there is very substantial confusion and, indeed, apprehension within the financial services sector about the scope of these requirements and how, in practical terms, compliance is going to be efficiently and speedily achieved.

I want to turn, secondly, to the question of the series of financial collapses over the past few years which the committee has been examining closely over a number of different inquiries. In particular, I want to comment on the inquiry into the collapse of Trio, which the committee conducted over a period of more than 12 months, and a report was issued in May of last year. To remind the House, this was a financial collapse in which over 6,000 Australian superannuation and other investors were defrauded of $176 million. It is troubling that eight months later there still has been no formal response from the government to the parliamentary committee's report. This compounds the, regrettably, poor performance that we have seen from the government and its agencies at every stage of the Trio collapse.

The committee commenced an inquiry in 2011 and found that this fraud began several years ago in late 2003 when an existing funds manager was taken over by those involved in the fraud, but it took a number of years before regulators, APRA and ASIC, intervened. What is also troubling is that, so far, most of the major perpetrators seem to have got away with it. Only one local foot soldier, Mr Shawn Richard, was convicted and jailed, but the people who are suspected of being the international masterminds, particularly Mr Jack Flader, so far, have not been pursued.

As the chair indicated, we asked further questions of ASIC at the most recent oversight hearing as to whether it is continuing pursuit of others involved in this fraud. It is certainly the clear view of the committee that work should continue on the part of the government and its agencies. We made that clear in our recommendations. We called on ASIC, APRA and the Australian Federal Police to urgently reopen an investigation into the likely criminal activity in this matter. We also recommended that the government should consider another group of Trio investors, who were not beneficiaries of the compensation order made by the minister in relation to some investors affected by Trio. We recommended that the government should consider whether that additional group, those who invested in the ARP Growth Fund, are also entitled to compensation under the existing law. Certainly, I would be anxiously interested to see what the government has to say in relation to that recommendation when it finally produces its response to the committee's report.

When a parliamentary committee concludes that $176 million of superannuation and other investments have effectively been stolen, you would hope that the relevant minister would jump to respond—and I would hope that, by this point, the Minister for Superannuation and Financial Services would have directed his agencies to reopen a criminal investigation and would have directed them to fully investigate all options for compensation under the existing law. Unfortunately, to date we have heard nothing. So I call on the government to urgently respond to the committee's report and I call on the agencies of government to continue their pursuit of those who were involved in this major fraud who have not yet been brought to justice.

The third issue I would like to address is one which has received significant recent publicity, which is a hoax media release purportedly from ANZ bank, claiming that the bank had withdrawn funding from the Maules Creek Coal Project of Whitehaven Coal. As has been reported, this serious hoax led a number of investors to sell their shares at prices below the previously prevailing market price. Quite remarkably, senior Australian Greens politicians have spoken positively about this particular episode. They have spoken of it as a protest and as being within a tradition of protest. It is very disappointing indeed that senior political leaders in Australia would in any way condone an exercise which has led to a number of investors being seriously misled and consequently suffering financial loss. I flag my intention to ask questions, at the next ASIC oversight committee hearing, of the regulator about this episode and the actions that they are taking to get to the bottom of what happened and whether this involved market manipulation. This is a matter that the regulator should be pursuing with great seriousness.

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