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

My electorate contains a great number of professional financial advisers and I am sure the rest of the members in this House also have many in their electorates. Financial advisers have long provided an important service to the Australian community. Proposed reforms in this sector will increase red tape, increase costs and reduce choice for consumers. Sensible financial advice reforms would increase transparency, consumer choice and competition, striking the right balance between appropriate levels of consumer protection and ensuring the availability, accessibility and affordability of high-quality financial advice.

I have been contacted by a number of financial planners in my electorate who are concerned about the proposed changes emanating ultimately from the Cooper review. In particular they have concerns in three main areas. They are concerned that part of their business is being taken away by banning commissions on insurance written through superannuation funds, that they will have to renegotiate their service agreements with their clients every two years and that the effect on many businesses is going to be negative because of the increased compliance and audit costs that will be incurred.

Ultimately it is unnecessary for the government to involve itself and require that people must re-sign contracts with their advisers. Clients have always had the ability to sack their advisers at any point in time. The Assistant Treasurer and Minister for Financial Services and Superannuation is, in my opinion, merely looking out for his union friends and disguising his proposals as positive changes for consumers. Opt-in and risk commission bans in superannuation have absolutely no connection to the financial collapses of Storm, Westpoint and Trio, just to mention some, and will not prevent these things happening again.

The coalition does not support Labor's push to force people to re-sign contracts with their financial advisers on a regular basis. Although the minister watered down his plans to have advisers re-sign contracts every two years, this proposal will still add unnecessary red tape and increase costs for both small business financial advisers and their clients. There have been some estimates that these costs may add up to an extra $50,000 per year to the cost base for a financial planning business.

The minister has proposed that all commissions on risk insurance inside superannuation be banned. The coalition oppose this as there is already a problem of underinsurance in this country and a ban would only make that worse, increasing the upfront cost of taking out adequate insurance cover. There are plenty of times where it is a very sensible and prudent strategy to write insurance through superannuation. The government has proposed banning volume rebates in this new legislation. Volume rebates do not distort advice. They are part of legitimate business practice and deliver direct benefits to consumers and enhance competition. The only volume rebates that should be banned are those which distort investment advice. Whilst there are important and necessary alterations to be made to the financial-advice sector, it is important that this sensible reform agenda is not hijacked and turned against small financial-planning businesses to benefit or provide gain to vested interests. The regulations should be the same across the entire industry, including industry funds. This is particularly relevant where corporate governance is concerned and the minister is yet to adequately explain why the corporate governance recommendations of the Cooper review have been ignored.

As I said at the outset, these professional advisers provide a valuable service to the community and it is time they stopped carrying the responsibility for failed products. It is not the advisers' fault, it is the fault of the products' manufacturers, and it is time that regulations were used to attack those as well. (Time expired)