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

I'm pleased to rise to speak on the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021. As has been outlined, this implements recommendation 2.10 of the royal commission's recommendations.

Now, all of us in this place would agree that good-quality professional advice for Australians who need it or seek it is important. Nobody would argue with that proposition. But I do take exception to the comments of those opposite that seek to besmirch the reputation of a great many professional advisers in the advice industry. If you have a look at the recent FSC report into affordable advice, they make the point that some 71 per cent of consumers agreed or strongly agreed that the financial advice they received helped them achieve greater financial confidence. Seventy per cent agreed or strongly agreed that it helped improve their financial situation.

I acknowledge, as somebody who came from that industry prior to coming into this place, that there are people in the industry who have done the wrong thing by consumers over the years. That disappoints me greatly and I will never defend that conduct, but that doesn't take away from the fact that the vast majority of advisers are professional advisers whose focus is ensuring they provide advice that is in the best interests of their clients. Those opposite miss the point that it's also in the advisers' best interests to provide quality advice to their clients, because that is how they get to build and maintain their businesses. There are many thousands of advisers across the industry who have been in business for 20 or 30 years or longer. You cannot say that those people are providing poor quality advice.

I think it was the member for Fenner who noted in his remarks that consumers want a greater say. I would say, Mr Deputy Speaker, that consumers have a say each and every day that they decide to retain the relationship they have with their adviser. If they are not satisfied with the advice and the service they're receiving, they have the right and the ability, each and every day, to go to another adviser or to take care of their financial circumstances themselves. If that were not the case, why would there be so many advisers—and there are tens of thousands of advisers in this industry—who have successful, profitable businesses that are looking after Australians each and every day?

What we're seeking to do with this legislation is to create a more streamlined process to ensure that those who are doing the wrong thing by their clients are held to account and, where necessary, removed from the industry. In addition, we are removing some of the duplication in the regulatory environment for advisers, particularly those who are tax financial advisers, by removing the requirement for them to be registered with the Tax Practitioners Board, which will result in some savings in costs.

Ultimately, as we look at the financial planning industry, it is important that it is affordable for clients. A number of other people have touched on that particular issue, and the FSC acknowledge it in their report. The importance of financial advice today is no more obvious or necessary than it has been as a result of the pandemic. Many of the advisers I speak to have been very busy in just sitting down and speaking with their clients about their financial circumstances and how to manage the times that we are going through, and ultimately that is the most important role of a professional adviser.

In this place we often hear discussion about product. Many of the things that the member for Whitlam and the member for Fenner outlined in their contributions were product failures. They were not necessarily failures of advice, albeit that they may well have been in circumstances where inappropriate products were recommended to clients. We need to separate out product from advice, because they are two very different things. The most important role of an adviser, in my view, is the strategic advice that the adviser provides to their clients, based on the needs of the client as outlined to the adviser in their initial discussions. In some cases, that may be as simple as wanting an income protection policy. In other cases, it may be much more complicated in terms of wanting retirement planning, estate planning, investment advice, debt reduction advice, a whole range of issues. But the scope of that advice is the product of a discussion between the adviser and their client.

It is incumbent on the adviser to properly elicit the scope of advice their potential client is seeking. One of the skills of advisers is to be able to have those discussions and elicit the information necessary to give professional advice. Where a client is recommended to invest in a particular Australian share fund, for example, and negative events impact that share fund on the Australian share market, I would defy anybody in this chamber to be able to get their client's money out of that share fund in the current regulatory environment, let alone for the fund manager to do it. It is practically and physically impossible for an adviser to be able to move their client's money where necessary, in a timely manner, without there being an impact on the client's funds in the current regulatory environment; a regulatory environment, I might add, that has been created in the name of consumer protection. A regulatory environment currently militates against that because of advisers' inability to deal quickly with issues to protect clients' funds.

Those on the other side and many others in the community would say that that's a failure of advice and a failure by the adviser. I would say that it is not. It's a failure of our regulatory environment, because it does not recognise the importance of the adviser's role in that event happening. As professional advisers, the most important thing they can do is sit down and speak with their clients about the issues they're facing. Have that informed discussion about what needs to change in the strategy, if anything, to change the direction and result of that adverse event. But our current regulatory environment precludes that, particularly from a cost perspective, because of the paperwork and the duplication that has been built into the system.

I'm pleased to say that we are working through these processes in my discussions with Minister Hume's office. From speaking to those in the industry, I know that they recognise that the industry has to change. I will continue to argue the case that the most important part of the relationship between advisers and their clients is the strategic advice that advisers provide. The product is secondary. This legislation is a great step along the way of improving the operation of the system. Is it the end of the journey? No, it's not; there is much work yet to be done. But, in the process, we need to ensure that we protect the viability of the professional financial planning businesses and the professional financial planners that are out there looking after Australian consumers each and every day. As the FSC report quite rightly points out, 70 per cent of those people recognise that it's adding and improving their financial outcomes.

We should be very, very careful not to throw the baby out with the bathwater. Despite what those opposite say, it is the strategic advice that is provided that is the key to the future of everyday Australians' wealth being grown, whether it be in superannuation, whether it be in investments or whether it's protecting wealth by having the appropriate insurance policies in place, such as income protection or, sadly, life insurance, if somebody passes away.

The past 18 months have shown quite clearly the importance of all of those aspects being taken into account, but we need to ensure, in the longer term, that the advisers have, in conjunction with their clients, the ability to provide advice that is commensurate with the scope of advice the client is seeking. If a 25-year-old client comes in and wants only income protection insurance, because he's a self-employed tradie, the adviser should be able to give that to him in a cost-effective manner, not such that it's going to cost $2,000, $3,000 or $4,000 because of the current regulatory environment. The adviser should be able to do it for $500, $600 or $700. Over time, that relationship with that client might grow, but it's not going to grow if they've got to charge $3,000 or $4,000 upfront. But the important thing, for that client, as a self-employed tradie, is that they now have income protection insurance so that, if something happens, they know their financial position is protected.

I'm pleased to support this bill, because I think it is a great step in the right direction. As I said, we have more to do, but I want to put on the record that there are a great many professional advisers out there who have built businesses over 20, 30 or 40 years, and they will continue to be supported by this side of government and by me, and we'll continue to work with them to make this a better profession for the future so that affordable, appropriate advice can be available to all Australians. I commend this bill in its original form to the House.

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