Jerome Laxale (Bennelong, Australian Labor Party) Share this | Hansard source

I welcome the opportunity to speak on the Treasury Laws Amendment (2023 Measures No 3) Bill 2023, primarily because I like speaking on TLABs. They're structured and they're direct. They contain the detail on policy ambitions of our government. They do the heavy lifting and simplify our complex laws, and in many instances they're like the spring-cleaning of administrative legislation. This bill contains four schedules designed to improve government programs and, as I said, clean up some of that legislation. I'll deal with each of them accordingly, some of course in more detail than others.

Schedule 1 of this bill introduces new rules that prohibit schemes designed to avoid the application of a product intervention order in relation to a credit facility made under part 7.9A of the Corporations Act 2001. This amendment helps ensure that a person or a business cannot respond to a product intervention order by engaging in avoidance activity that is not covered by the order but results in similar detriment to customers. Schedule 1 supplements the Financial Sector Reform Act 2022, which contains anti-avoidance measures to encourage compliance with the National Consumer Credit Protection Act 2009 and for product intervention orders made under the Credit Act, with a view to minimising consumer harm. Schedule 1introduces into the Corporations Act equivalent provisions regarding the prohibition to avoid relevant product intervention orders.

Safe, well-regulated consumer markets for credit products are a core element of a strong and inclusive economy. Anti-avoidance provisions are aimed at reducing the risk of consumer harm from predatory lenders who modify their business models to avoid the application of consumer protections in the Credit Act and other financial services legislation. Predatory credit products take advantage of people who are already very financially vulnerable, and charge excessive and unreasonable fees and interest. So schedule 1 of the bill will reduce the risk and harm, and limit the operation of these predatory lenders who are engaged in avoidance behaviours. We know that predatory lenders have had it too good for too long.

In April 2022, just before the last election, our corporate regulator, ASIC, made an extraordinary statement, saying that predatory lending in Australia was at 'endemic' levels, and that unregulated innovation in the industry—particularly in the buy now, pay later industry—had created rising risks for financially disadvantaged people. In the same month, ASIC launched legal action against two companies, Rent4Keeps and Layaway Depot, for allegedly disguising loans as lease contracts for white goods. The regulator alleged these companies breached consumer protection laws by developing business models that avoided obligations on credit providers, including the 48 per cent annual cost cap, to extort low-income earners out of enormous sums. The court filing from ASIC referenced one customer who, after entering a lease arrangement, had to use his Centrelink payments to pay almost $2,500 for a fridge which retailed at $365. ASIC deputy chair Sarah Court said at the time, 'These practices had an enormous impact on vulnerable Australians.' As an update: in June 2023, the Federal Court ordered Layaway Depot to pay a penalty of $375,000 for breaches of the Credit Act. The case against Rent4Keeps has been listed for case management in August this year and trial in 2024. I encourage the regulator to continue to monitor this sector. These laws, proposed today, will close loopholes that are currently exploited by predatory lenders, and I commend them to the House.

I'll come back to schedule 2 a little later.

Schedule 3 of this bill implements recommendations made by the Council of Financial Regulators to strengthen regulatory powers and facilitate competitive outcomes in the market for clearing and settlement of cash equities traded in Australia. The ASX group has a monopoly over those services. These reforms will have a significant benefit for businesses that compete with the ASX in other parts of the cash equities markets, such as financial market operators—all ones that rely on ASX's monopoly on clearing and settlement services, such as clearing and settlement participants and share registries. Delays in being able to access these systems, and a lack of transparency around a fair price for these services, can increase costs and stall innovation.

Schedule 4 to the bill makes a number of improvements to the operation of the First Home Super Saver scheme to ensure it works better for first home buyers. Currently, the legislation underpinning this scheme is inflexible and can occasionally result in a poor user experience—including some people who have made an error in their application process and have had their first home savings locked up in superannuation until retirement. Schedule 4 of the bill improves the operation of the scheme by providing greater flexibility, and using the scheme to amend or revoke applications to correct errors that we all sometimes make. Transitional provisions will ensure that these changes apply retrospectively back to 1 July 2018. This ensures flexibility can be afforded to past cases—very important spring cleaning there.

Back to schedule 2 of the amendments. They fulfil our government's pledge, made during the election, to better appreciate the experience of existing financial advisers. It is of the utmost importance that our industry remains vibrant, dynamic and accessible to all. As a government, we hold a deep commitment to nurturing an advice industry that upholds robust, professional standards, thereby granting Australians access to top-tier financial guidance, yet it has become increasingly clear that the current educational requirements fail to adequately recognise the lived experience of financial advisers. We must strike a careful equilibrium: one that both professionalises and keeps the industry professionalised, and retains all the experience that has been gathered over the past few decades. Financial advice can play a pivotal role in the lives of individuals, families and businesses, guiding them in making informed financial decisions. In an ever-evolving and intricate financial landscape, the demand for professional advice has never been more pressing. With more and more Australians getting access to their super by coming into retirement, that might be the most cash they've ever received in their lives. Having cheap, affordable, reliable financial advice is incredibly important, and that's what this schedule seeks to address.

Financial advice fosters financial literacy and empowerment. Countless individuals lack the requisite knowledge and confidence to competently manage their finances, and advisers stand as educators, endowing their clients with the financial knowledge that they've built up over decades. They help break educational barriers surrounding intricate financial concepts and investment alternatives and provide guidance to risk management. By bolstering financial literacy, advisers equip clients with the necessary tools to make informed decisions and assume command over their financial future.

It's essential to acknowledge that financial advice extends beyond individuals to encompass businesses and organisations. Small businesses and startups often rely upon the wisdom and expertise of financial advisers. These professionals offer guidance in areas such as business planning, cashflow management, financing options, risk evaluation and strategic growth. By working alongside financial advisers, they are able to build towards a prosperous and sustainable business. This not only is good for those small businesses but provides wider support to economic expansion and job creation for our communities.

Ever since the introduction of the requirement for financial advisers to undertake additional studies, we have witnessed a significant decline in the number of practising advisers. At its peak, the industry boasted around 28,000 advisers, but now that number is around 16,300. This decline is troubling as it directly affects the accessibility of quality financial advice for Australians and Australian businesses. What's more concerning is the fact that aspiring entrants to the financial advice industry face hurdles that hinder their ability to meet these requirements, thus impeding their path to joining the profession. So it's abundantly clear that the current requirements fail to strike that proper balance between professionalising the industry and using the expertise of seasoned professionals.

Just recently I had a conversation with a local constituent from my electorate of Bennelong about his extensive experience as a long-term financial adviser and the accessibility of the FASEA exam. Mr Todd highlighted the issue of accessibility of this exam. He is an experienced financial adviser with over 40 years of dedicated service, and he has encountered challenges with the current format of the exam. To address the issue, Mr Todd has proposed alternative methods for participants aged above 65, such as oral examination, role-play, paper based take-home written exams or assignment based assessments. I commend Mr Todd for putting forward this proposal, which sheds light on some of the technical disadvantages that older Australian financial advisers may face. The knowledge and skills that seasoned financial advisers like Mr Todd bring to the sector are integral to its ongoing success to ensure that Australians and Australian businesses continue to have access to robust and informed financial guidance. By providing further support and making accessibility changes for experienced financial advisers, we can create a more equitable system that allows these accomplished advisers to demonstrate their competence and continued contributions to the industry.

To address these concerns and ensure the industry's continued growth, schedule 2 of the bill proposes amendments that enable experienced advisers with at least 10 years of experience and a clean record who have successfully passed their exam to continue practising without the need for additional education. These amendments not only ensure the retention of these experienced advisers but also facilitate the entry of fresh talent. By creating a supportive pathway for new entrants, we can maintain a pool of advisers who can mentor, supervise and upskill these individuals, ensuring the continuity of quality advice for consumers.

It's important to emphasise, though, that these amendments do strike that balance. They do not compromise consumer protection. On the contrary, they uphold the highest standards of quality and professionalism. The experienced advisers affected by the amendments must have a clean record and must pass the exam, ensuring that consumers can trust and rely on the advice that they receive. This measure effectively safeguards the interests of consumers whilst recognising and leveraging the significant experience held by these professionals.

To ensure that these proposed changes reflect the diverse perspectives and needs of stakeholders, this schedule was of course subject to a comprehensive consultation process. The Treasury conducted public consultations on the policy settings, engaging with industry bodies, licensee representatives, financial advisers and higher education providers. Feedback, as you would expect, from the sector was mixed, with differing opinions on the best approach to recognise. The government has carefully considered these perspectives and has made the decisions that we believe strike a fair and balanced outcome for consumers, advisers and businesses. Timely passage of this legislation is integral to providing experienced advisers with the certainty they require, regarding the future, in their industry.

Let us stand together in support of an advice industry that thrives on experience, professionalism and, importantly, accessibility. By recognising the value of experience, we can ensure a prosperous future for both the advice industry and the clients it intends to serve. The changes proposed in schedule 2 are imperative to acknowledge and honour the experience held by these advisers and guarantee the accessibility of financial advice for all Australians. Our commitment remains in maintaining robust professional standards while valuing and harnessing the expertise and contributions of advisers. I commend this bill to the House.

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