Laurie Ferguson (Werriwa, Australian Labor Party) Share this | Hansard source

I rise to speak on the Corporations Amendment (Streamlining of Future Financial Advice) Bill 2014, which, essentially, undermines significant provisions of the Future of Financial Advice legislation. The member for Kingsford Smith in an earlier contribution contrasted, as he saw it, the difference between the two sides of this House, and I thought he was very telling about his personal experience on the relevant committee that structured the legislation that we are destroying this evening. He had very genuine tales of people whose houses had to be sold, whose sometimes limited savings were totally destroyed. He obviously, as did we all, stressed the impact of Storm Financial, Trio Capital, Opes Prime, et cetera, in precipitating that inquiry and that legislation.

I thought that, rather than the contrast between the two sides of the House, there was an equally telling contrast between the contribution of two members on the opposite side. The member for Riverina, who is in the House, spoke of the government getting on with the job. He talked about the mess of the previous government. He boasted of his own pronounced business acumen. He took time to praise Senator Cormann as one of the greatest financial thinkers of the early 21st century. He spent most of the time sailing the current legislation in a very negative contribution. He had the effrontery as well to condemn the previous government for lack of consultation. With heard more recently the way in which they rushed this legislation over the Christmas period so as to avoid consultation. Those that have followed this debate actually know that the previous legislation came after an extensive inquiry with significant investigation of what had occurred in those collapses.

There is a contrast because the member for Bradfield, who has a fair bit of knowledge in this sector, came in here and gave a very different slant. He claimed that the government was broadly supportive of the previous government's measures; they were his words. He went on to speak of 'some amendments'. He was, in a sense, minimising the difference between the two. There is a reason for this because he actually knows what is happening out there in voter land. He is not living distant from public commentary.

When we speak of these other collapses that were so crucial in persuading the previous government to try to protect consumers, there has been comment more recently. Christopher Joye in the Financial Review commented on a more recent problem:

The CBA crisis helpfully highlights the problems that can arise when people try to push products while simultaneously offering consumers supposedly independent advice that is in their "best interests".

He described the performance of the coalition as:

… amateurish efforts to unwind Labor's Future of Financial Advice (FoFA) laws.

More recently, of course, we have had yet another instance of the danger that confronts the Australian people and people who have worked all their lives to get some superannuation savings. Some of it might be very paltry compared to the expectations of members in this House, but for them it is really crucial. We have another instance of this which was cited by Adele Ferguson in the Sydney Morning Herald of 16 August where she and another author spoke of:

… revelations in Fairfax Media this month that hundreds, possibly thousands, of customers of Macquarie may have been wrongly classified as sophisticated or wholesale investors rather than retail investors to get around the extra regulatory requirements and paperwork that advisers must complete for retail clients.

We have two highly respected Australian operations being forced now to apologise to the people they have been giving advice to because of the poor manner in which it was given and the misleading way in which those people were handled. That is the kind of reality that is still out there.

The government, rather than trying to come in here and sloganise about 'regulation and red tape', should be aware of the reality of life. We went through a financial crisis precipitated in the United States because of this exact deregulation in housing mortgage finance and in the way that American banking and financial institutions had, over a period of time, been allowed to have more lenient controls. We went to a situation where Australian jobs had to be protected. Massive revenue had to be poured into saving Australian jobs because of an international crisis precipitated by lack of controls. And they have the effrontery today to say that it doesn't matter that the people in this country trust financial advisers. When we talk about them it is very interesting, isn't it? The recent debate has started to look at how skilled these people are. It has been shown that you can basically get a financial advice title with eight days of work and that you do not have to have any tertiary qualifications. There is a plethora of financial training operations out there that are very dubious. That is another aspect which has fortunately been exposed lately.

What we have here is a very, very real unwinding of this. Whilst I thought the member for Bradfield was in general more persuasive than many other people on the opposite side, I thought it was a bit rich when he tried to defend the undermining of the catchall provision of best interests by saying that this particular phrase, which they are deleting from this legislation, is exceptional and subject to unbelievable legal interpretation problems. That was his argument why we do not, in other words, demand that financial advisers have the best interests of their clients. He pointed to the phrasing: '…take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances'. He says that we can justify decreasing the protections of Australian consumers, decreasing the protections for people who have saved all their lives to have some kind of security—basically allow people to not act in their best interests—because this phrase would lead to difficulties in litigation and in regards to interpretation! You would not have to be too bright to understand what that phrase actually means.

As well as that we have had the scrapping of 'opt in', allowing advisers basically for the rest of their lives trade on a stream of money coming from advice given decades previously. What is so unreasonable about every two years requiring them to in any manner justify themselves to the people they are supposedly assisting and to actually give those people some knowledge of what they are doing for them? They talk about 'getting the balance right'. Is it that unreasonable that people get some kind of protection in those circumstances?

They intend to amend it so that advisers only have to provide annual disclosure to clients who commence with them after 1 July 2013. If it is justified on 1 July 2013, why the hell is isn't it equally justified for people before that date? As a previous speaker said, the way in which this government is obviously bending to corporate interests is so strongly driven home by that particular provision. Finally, and importantly, they are lifting the ban on conflicted remuneration. The ban will only apply to personal advice not general advice—and we all know that that general advice provision has been changed in such a manner that even there the impact will be lessened.

It is not only in financial advice; in so many policy areas we see this government driven by the corporate interest. There was a debate on Monday in private members' business about charitable controls—every charity in this country supporting transparency, supporting people being able to know that their money is donated for a good purpose and is being used properly. But just because those private managers of charitable trusts are upset, just because there might be some kind of investigation of the way in which they—in a similar fashion to people getting payments for financial advice for decades—are ripping off his charitable trusts, they are going to scrap that particular legislation. We have also heard recently loud thoughts from them that maybe we should ease the controls over people on various company committees.

It has been said that this government will liberalise the way in which these companies can operate so that even if they commit the gross, indecent activities of James Hardy—in trying to avoid its asbestos responsibilities—they will not be affected.

In summary, this particular legislation has the wrong priorities. It seeks to undermine protections for Australians who really need that kind of protection under the guise of concern, with red tape, bureaucracy and regulation et cetera.

Debate interrupted.

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