Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

It is interesting when we have been talking about the financial planning industry today that there have been all sorts of references to finance brokers and others who are not even covered by this legislation, so it is wonderful to see that, again, Labor is on the job and actually knows what it is talking about—not!

Let us have a look at the proposed changes and some of the history of FoFA, because I think it is important to reflect on that. In its original form, FoFA was designed to improve the trust and confidence of Australian retail investors in the financial advice industry, which I think is a very noble goal, and we support that fully on this side of the House. That goal was to be achieved by specifically tackling conflicts of interest that were seen to pervade the financial planning industry at that point in time. The government supports the principles of FoFA but has concerns about the regulatory burden imposed on the financial planning industry. And we have seen from feedback from the industry that they were looking at costs of some $90 million per year in implementation costs and another $190 million in further savings. When speaking to local financial planners, they have assured me that these cost savings will be passed on to their customers. I was speaking to one of our local planners this afternoon, and he made the point to me that one of the by-products of the current FoFA regime is that some 10 per cent of potential clients are declining advice because of cost. In an area like Beenleigh this is a significant concern as many of these people actually need assistance and advice.

The sad thing about this is that it is the very thing the FoFA regulations promoted by the previous government were supposed to deal with. They were supposed to make it more cost effective for people. As usual with what the previous government has put in place, the reality ends up being far from what was originally envisaged.

I also took the opportunity to speak to others in the financial planning industry to seek feedback on their views on these proposed changed. One of the key points they make with respect to these proposals is that they will provide clarity in regard to the provisions relating to the best interests of clients. We as a government see no reason whatsoever to water those down, but we do see great value in ensuring clarity so that both planners and clients understand what they are being protected for. In their view, the objective of these changes will place the financial planning profession on an equal footing with other professions, such as solicitors, doctors and accountants.

There are also claims by some that the proposed changes will result in another Storm Financial type of collapse. There is nothing in FoFA, or these proposed changes, that would result in the protection of another Storm Financial collapse. That is ASIC's responsibility, and ASIC needs to shoulder some of the responsibility for what has happened in this industry due to their not enforcing regulations that are already in place.

I have also had feedback from industry that the present FoFA laws have also created confusion. For example, advisors report that when they send out the fee disclosure statements some clients see that as a bill and have actually sent in a cheque, without realising it was just a statement for fees and services that have already been paid. Further, some of the over-the-top negativity from certain stakeholders with vested interests in this sector has certainly not helped with this confusion and uncertainty.

As we sit down to look at the shambles left by those opposite, we see that it is only this government that can start to sort out this mess. Only we can provide clarity for the long-term future of not only the financial planning industry but more importantly for the millions of Australians who will require that advice as their superannuation and other investment balances continue to grow, thanks to our wonderful superannuation system. I fully support the changes that we are bringing to provide that clarity and certainty to everyone in our community.

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