Josh Frydenberg (Kooyong, Liberal Party) Share this | Hansard source

In my electorate of Kooyong, just as right across the nation, the financial services sector plays a major role in our economy. When one takes into account the banks, insurance companies, accountancy practices, financial planners and the many other practitioners in this sector, it comprises more than 400,000 employees and contributes up to 10 per cent of GDP. It is therefore incumbent upon all good members in this place to speak out when the Labor government seeks to place additional regulatory and cost burdens on this industry without undertaking sufficient stakeholder consultation or conducting a rigorous cost benefit analysis.

But this is in fact what the Gillard government has done with the FOFA—Future of Financial Advice—reforms. These reforms, which include increased powers for ASIC, bans on conflicted remuneration and new rules around advice and disclosure of fees, follow an inquiry by the Parliamentary Joint Committee on Corporations and Financial Services, known as the Ripoll inquiry, which sought to rebuild community confidence in a sector that had seen the collapses of Opes Prime, Storm Financial, Trio and Westpoint. However, in its response, the government has gone too far, producing sub-optimal outcomes for the very customers that the government is purporting to help.

In the words of John Brogden, CEO of the Financial Services Council, industry estimates FOFA will cost $700 million to implement with a further annual compliance bill of $375 million. Consumers will bear the brunt of these costs and, worse, many people will stop receiving advice or not seek advice at all. Moreover, the government's own explanatory memorandum indicates the legislation will lead to job losses in the sector of up to 6,800 employees.

At a time when we are encouraging financial literacy for more people to appropriately plan for their financial future, this is a bad outcome indeed. If the coalition is given the opportunity to form government after 14 September we have made clear we will chart a better course. This will include: the removal of the opt-in provisions regarding client agreement to ongoing advice fees; the simplification and streamlining of the additional fee disclosure requirements; improving the best interest duty; providing certainty around the provision and availability of scaled advice; and refining the ban of commissions on risk insurance inside superannuation. What is more, we have expressed our significant concerns with the government's most recent move to require financial planners to register with the Tax Practitioners Board and comply with additional regulatory burdens.

What we the coalition have said is that the relevant schedules 3 and 4 from the government bill that seek to create this new regulatory regime and a new type of regulated service should be removed and the existing carve out from the Tax Agent Services Act for financial services licencees, which expires on 30 June 2013, should be extended for another year.

Mathias Cormann has done a fantastic job in exposing the Labor Party's failures in this area. If we are given the opportunity to form government after 14 September, we will deliver for the financial planners and for the financial sector.

See this speech in context