Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 will improve the integrity of consumer markets for credit products, remove barriers for financial advisers, and support competition in the provision of clearing and settlement services for cash equities.

Schedule 1 to the bill introduces new rules that prohibit schemes designed to avoid the application of product intervention orders made under part 7.9A of the Corporations Act 2001, in relation to a credit facility.

Safe, well-regulated consumer markets for credit products are a core element of a strong and inclusive economy.

That's why the Australian government introduced reforms to the regulation of payday lending and consumer leases through the Financial Sector Reform Act 2022.

These changes were long overdue and they gave effect to the government's response to recommendations of the 2016 review of small amount credit contract laws, which included a recommendation to introduce laws to prohibit avoidance behaviour.

The Financial Sector Reform Act 2022 introduced anti-avoidance provisions with respect to Australian Securities and Investments Commission (ASIC) product intervention orders which were made under the National Consumer Credit Protection Act 2009. This bill extends these provisions to product intervention orders that are made under the Corporations Act of 2001.

ASIC has made several product intervention orders under the Corporations Act 2001 targeting predatory lending products causing significant consumer harm—that is, the predatory lending products were causing significant consumer harm.

Product intervention orders quite simply allow ASIC to temporarily intervene in a range of ways up to, when necessary, banning financial products and credit products when there is a significant risk of consumer detriment.

By bringing the anti-avoidance provisions in the Corporations Act into line with those in the National Consumer Credit Protection Act, this amendment will ensure that predatory lenders cannot respond to a product intervention order by engaging in avoidance activity that is not covered by the order but results in a similar kind of detriment to consumers.

Schedule 2 of the bill is an important one. It delivers on the government's election commitment to remove the education requirements for experienced financial advisers who have 10 years experience and a clean record, who have passed the financial adviser's exam.

Schedule 2 also addresses technical limitations in the education requirements for new entrants into the financial advice profession and financial advisers who are registered tax agents.

Together, these amendments address practical implementation issues faced by financial advisers.

By better recognising the experience of long-serving financial advisers, the government is providing a pathway for experienced advisers to remain in the industry. This means that new entrants have the benefit of their experience through mentoring, through supervision and through employment. It also means that more Australians will have access to financial advice than would otherwise be the case.

The government is committed to an advice industry with strong professional standards that give Australians access to high-quality financial advice and to do this by not creating unnecessary barriers to entry, ensuring financial advice remains a career of choice.

Schedule 3 to the bill implements the Australian Securities and Investments Commission Act 2001, the Corporations Act 2001, and the Competition and Consumer Act 2010 to facilitate competition in the provision of clearing and settlement services for cash equities traded in Australia, and to ensure that, should competition emerge for these services, it is safe and effective.

These amendments implement a recommendation of the Council of Financial Regulators, which considered issues relating to competition in clearing and settlement services of cash equities in 2012, 2015 and 2017.

To do so, schedule 3 introduces a rule-making power for the Australian Securities and Investments Commission and an arbitration power for the Australian Competition and Consumer Commission. The rule-making power will allow ASIC to make rules applicable to clearing and settlement facility licensees, their associated entities, and other persons specified by the regulations, about their activities, conduct, or governance in relation to clearing and settlement services covered by a ministerial determination.

ASIC will be empowered to make rules to implement the Council of Financial Regulators' policy statements in both a monopoly or a competitive environment. This flexibility will allow ASIC to adjust regulatory settings where a committed competitor for the provision of clearing and settlement services emerges to ensure that competition is both safe and effective.

In the interim, ASIC will be able to make rules enforcing the Council of Financial Regulators' regulatory expectation for the monopoly provision of clearing and settlement services.

The arbitration power will allow for the ACCC to arbitrate disputes about the terms and conditions of access to clearing and settlement services subject to a ministerial declaration.

The government expects this declaration will only cover certain clearing and settlement services provided under monopoly conditions, or where a provider exerts a significant market power. Once competition is effective for those clearing and settlement services, the government expects that the ministerial declaration would be repealed in respect of those competitive services.

Until then, this arbitration regime will provide an important backstop for entities seeking access to clearing and settlement facility infrastructure where good-faith negotiations have broken down.

Schedule 4 to the bill makes a number of technical changes to the Taxation Administration Act 1953 and Income Tax Assessment Act 1997 to provide the operation of the First Home Super Saver Scheme so that it works better for first home buyers, something that could not be claimed at the moment.

Currently, the legislation underpinning the First Home Super Saver Scheme is inflexible and can result in a poor user experience with the scheme, including users having their savings for a first home locked away until retirement, not what was intended by the scheme but the way the scheme is operating under its current rules.

These changes will better enable mistakes made during the First Home Super Saver Scheme release process to be fixed without adverse financial outcomes for those who use the scheme.

To do so, schedule 4 will increase the discretion of the Commissioner of Taxation to amend and revoke applications to have funds released under the First Home Super Saver Scheme, and will allow individuals to do the same, without those individuals being prevented from reapplying in the future.

Importantly, these changes will apply to eligible applications made from 1 July 2018, so they will be retrospective. This helps ensure users of the scheme who have not been paid any of their First Home Super Saver Scheme savings due to an error in the application process can access the money they saved for that purpose to purchase their first home.

Schedule 4 also includes special transitional provisions which extend the flexibility provided by the amendments to eligible users who previously unsuccessfully applied to have savings released under the scheme and have since started holding a relevant interest in real property or land.

The Legislative and Governance Forum for Corporations was notified in relation to the amendments made in schedules 1 and 2 to this bill as required under the Corporations Agreement 2002.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.