Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Hansard source

Labor's future of financial advice reforms equals more red tape, higher costs and less choice. As we said at the time, reforms in this area need to strike the correct balance, the right balance. We were concerned at the time that Labor's reforms would lessen the affordability and availability of advice. There has been debate, much of it ill-informed, such as the contribution just then by the member for McEwen.

The best-interests duty remains in place. We are not watering it down; we are making it work in practice. What we are introducing is a comprehensive set of steps that will provide greater certainty, better certainty, about what the duty requires of financial advisers. Surely the hallmark of well-designed regulation is that the regulated know what is expected of them and the community knows what they have a right to expect. That is so crucial. Our changes will provide that certain incentive payments can be made where they do not conflict with advice. This legislation is not and never was designed to bring back commissions. The legislation will explicitly prohibit payments made solely because of a financial product, in relation to which general advice was provided, has been sold.

The legislation will explicitly prohibit, stop—call it what you like—a recurring payment made because someone has been given general advice. As Minister for Finance and Acting Assistant Treasurer, Senator Cormann is doing an outstanding job, an absolutely wonderful job. Not many people would have the drive and the energy necessary to take on such a task, but he certainly has. The government's FoFA amendments are about ensuring more affordable, better and improved quality advice. It delivers on our election commitment to reduce the unnecessary regulatory burdens on business and consumers and to promote greater access to high-quality financial advice. But do not just take my word for it.

Whilst I was out of the chamber for an hour I actually put in a call to Trevor Ion, who is a 28-year veteran of financial advice in Wagga Wagga. He runs a small adviser's firm, in conjunction with his wife, Sue. And he said his biggest problem is that he spends so much time on compliance. Labor love red tape. That is why they introduced all these reforms, because they love red tape. He said that it just adds to more cost which, as he admitted, gets passed on to the consumers. And he does not want to do that.

He talked about FoFA reforms, FoFA legislation having common sense and efficiency. He said, 'That's what is needed here; not more red tape, bureaucracy and compliance.' He said that, under Labor, his practice was going to be less productive and less profitable. 'We're out there,' he said, 'trying to do our best for the people that we serve, trying to do our best for our customers.' He has customers and clients in Wagga Wagga. He also has a practice in Deniliquin and he services a lot of people in Griffith. He actually said that, when Labor brought in their reforms, companies spent millions of dollars getting product disclosure statements et cetera organised, training people and changing systems just to become compliant with what Labor requested, what Labor wanted. As I say, Labor love red tape.

He said the amount of compliance that has crept in over the years is just 'huge'—that was the word he used to describe it. He said it does not provide better outcomes for his clients; it just provides an 'onerous' burden—that was another word he used—on his small company. His is a small company. He is out there, doing his best, paying his taxes, trying to get a better outcome for the people he serves.

All the important consumer protections in FoFA will remain. I note that the member for McEwen is leaving the chamber, but he should stay. Only the unnecessary and costly red tape will go. Advice will have to be given in the best interests of the client. We all want that. Advice must be appropriate. An adviser must prioritise their client's interests ahead of their own—and Trevor Ion certainly does that. Conflicted remuneration structures, including commissions that have the ability to influence advice, will continue to be banned.

The government propose to keep important consumer protections, such as the requirement for advisers to act in the best interests of their clients, and also the ban on conflicted remuneration, while putting downward pressure on the cost of advice. That is the important thing here. We promised at the last election that we would restore the balance between important and appropriate levels of consumer protection and ensure that access to high-quality financial advice remains available and affordable for all Australians, particularly those in regional areas and particularly for companies such as Trevor Ion Financial Services. (Time expired)

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