Alicia Payne (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023. This is a bill to strengthen our economy and help consumers by enhancing the integrity of consumer markets for credit products, removing obstacles to financial advisers and fostering competition in the provision of clearing and settlement services for cash equities.

I'd like to start by thanking the Assistant Treasurer and Minister of Financial Services for his important work in making the financial services sector in Australia a safer and fairer place for consumers, advisers and businesses. Well-regulated consumer markets for credit products are crucial in a robust and inclusive economy. That's why the Albanese government is reforming the regulation of payday lending in consumer leases through the Financial Sector Reform Act 2022, which was in response to the 2016 review of small amount credit contract laws. That review highlighted the need to address avoidance practices employed by entities using business models not regulated by the credit act.

Any avoidance provisions are aimed at reducing the risk of consumer harm from predatory lenders who modify their business models to dodge consumer protections in the credit act and other financial services legislation. These provisions also extended the scope of ASIC's product intervention orders under the National Consumer Credit Protection Act.

Schedule 1 to this bill ensures that anti-avoidance provisions also apply to ASIC's product intervention orders related to credit products made under the Corporations Act 2001. By doing so, we ensure that predatory lending practices, which pose significant detriment and harm to consumers, are appropriately addressed. ASIC has already issued several product intervention orders to combat this harm, but it is crucial to align the anti-avoidance provisions with orders made under the Corporations Act.

Predatory credit products take advantage of people who are already financially vulnerable, subjecting them to exorbitant fees and interest rates—people like Frank, from my electorate. That's not his real name. He's a father in his 30s who works full time. He turned to payday loans when his son was hospitalised for six weeks. He took out loans to cover expenses, including accommodation costs, household bills and the high repayments incurred on his growing payday loan debts. The lenders allowed him to take out multiple loans. Some he took out to keep up with the debt he'd been sucked into. He ended up owing more than $6,000 to about 10 different payday loan providers and is now on a mental health treatment plan to help him cope with the stress. Schedule 1 of this bill will reduce the risk of harm and limit the operation of predatory lenders who engage in avoidance behaviours, ultimately protecting consumers from exploitation, such as that which Frank experienced.

Schedule 2 of the bill relates to the financial advice industry. It recognises the significance of the financial advice industry and the need to establish robust professional standards within the sector. Good financial advice provided by quality financial advisers is one of the most important pieces of guidance that Australians can use in their lifetime. Quality financial advice can set us up for life and ensure we have enough to live on and enjoy in retirement. The Albanese Labor government is committed to ensuring that Australians have access to high quality financial advice.

Unfortunately, the current education requirements fail to adequately acknowledge the practical experience of financial advisers, thereby neglecting the valuable contributions of experienced professionals. Since 2019, more than 10,000 financial advisers have left the industry, including experienced advisers with unblemished records. Experienced advisers play a critical role in mentoring and supervising new entrants during their professional year, sharing their knowledge and expertise. To address this issue, schedule 2 of this bill removes a significant disincentive for experienced advisers to remain in the industry, ensuring a pool of mentors to guide, supervise and enhance the skills of new advisers. This measure guarantees that consumers receive quality advice as the affected experienced advisers must possess a clean record and pass the financial advisers exam.

Schedule 3 of the bill acts on recommendations from the Council of Financial Regulators to enhance regulatory powers and foster competition within clearing and settlement markets for cash equities traded in Australia. The ASX Group currently holds a monopoly over these services. The proposed reforms will yield substantial benefits for businesses operating in other sectors of the cash equities market, such as financial market operators. Entities that rely on the ASX's clearing and settlement services, like clearing and settlement participants and share registries, will also experience positive effects. Any delays in accessing these systems, coupled with a lack of transparency surrounding fair pricing, can escalate costs and impede innovation. These reforms will empower ASIC to establish rules concerning the governance of clearing and settlement facilities, including those related to board composition and user input in governance matters.

This will grant ASIC the authority to formulate rules governing the ASX's CHESS replacement project. The delayed implementation of this project has incurred significant costs for the broader industry. If a competitor emerges in the provision of cash equities clearing and settlement, ASIC will ensure that competition is both safe and effective by establishing rules pertaining to interoperability between competing facilities. Should a competitor fail to emerge, rules will be in place to ensure competitive outcomes. ASIC will be able to create rules regarding the activities, conduct and governance of clearing and settlement facility licensees. This will guarantee that these services are provided on fair, reasonable, transparent and non-discriminatory terms.

To address situations where clearing and settlement services are controlled by a monopolistic entity, or one with significant market power, the bill introduces an arbitration mechanism. This mechanism will be available to industry participants who rely on access to clearing and settlement services to resolve disputes pertaining to access terms and conditions, including pricing. The intention behind this provision is to serve as a final efficient backstop when good faith commercial negotiations break down. The framework draws inspiration from the national access regime of the Competition and Consumer Act 2010, with some modifications to enhance the efficiency of the arbitration process and ensure timely outcomes for all parties involved.

Finally, schedule 4 of this bill introduces several improvements to the First Home Super Saver Scheme specifically tailored to enhance the experience of first home buyers. The current legislation governing the scheme is inflexible and can lead to poor user experiences, such as instances where individuals mistakenly lock their savings in superannuation until retirement due to application errors. By implementing schedule 4, the operation of the First Home Super Saver Scheme will be enhanced. First home buyers using the scheme will enjoy greater flexibility to amend or revoke their applications to correct errors and ensure the timely release of their savings. These changes will grant the Commissioner of Taxation increased discretion to amend and revoke scheme applications, and individuals will have the opportunity to withdraw or amend their applications prior to the release of the funds. To ensure a smooth transition, the bill includes transitional provisions that apply the technical changes to eligible applications made from July 2018. This allows flexibility for past cases. Transitional provisions extend the flexibility provided by the amendments to users who previously applied to have funds released under the scheme and have since started holding a relevant interest in real property or land.

This bill is an important piece of legislation, and it builds on the progressive reforms already accomplished by the Albanese Labor government in its first year in office. Whether it be reforms to payday lending and short-term credit that we've legislated, making our industrial relations system fairer, or making our world-class superannuation system more sustainable, since coming to government we have been upfront about the challenges facing the economy and the budget. We've inherited $1 trillion of debt and growing spending pressures. Our government is working to build a stronger economy to help ease cost-of-living pressures without asking people to compromise their longer-term financial security. This legislation builds on this by ensuring the financial services sector in Australia is a safer and fairer place for advisers, businesses and consumers—particularly vulnerable consumers.

Anne Stanley (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make my contribution to the Treasury Laws Amendment (2023 Measures No. 3) Bill. Today the Albanese Labor government continues its work in standing up for consumers, and this bill will make some necessary changes that will undoubtedly help and serve as a reminder that the economy's priority should be with the consumer. When a consumer purchases a product or service they are entitled to believe that it will serve its function. At the bare minimum they should have the certainty that it is safe and that it will not cause harm. But that was not what we saw in the royal commission into the misconduct in the banking, superannuation and financial services industry—we saw systemic abuse and consumers being ripped off. This government, after being elected last year, has been working to fix the system to make it fairer and safer for consumers.

Today we are supplementing the Financial Sector Reform Act 2022 with another key piece of legislation passed by this government. It was originally passed to reinforce compliance with the National Consumer Credit Protection Act, passed in 2009 by a previous Labor government. Australians have come to expect that Labor governments will look after them, and we will continue to do so. It is a responsibility of government to minimise harm, to protect and to serve, and that is why there will often be product intervention orders put in place—to protect those consumers. It should be expected that if an order is put in place, it will be followed. There would be an outcry if a recall order was put in place for a food product and vendors ignored the order and continued to sell it. We should expect the same of credit facilities. If a product intervention order is in place, will now be able to stop the avoidance activities that others have engaged in previously.

Consumers have the right to be protected. They have a right to be informed and to have access to advice. Sadly, we've seen an almost halving of the number of practising financial advisers in this country. Recently, I spoke to a constituent who had only just been informed, a couple of weeks before the end of the financial year, that their financial adviser was retiring and would no longer assist them. It being so close to the end of the financial year, just as tax time was rolling around, made it very difficult for this constituent. They now have to try to find a new financial adviser as soon as possible. That's why the Albanese government is delivering on its election commitment to better recognise the experience of existing financial advisors. This is to retain those who have been diligently working for consumers and provide further incentives for others to enter the profession. It makes sense in legislation to encourage good behaviour just as often as we discourage bad behaviour.

The amendments we are making today are for experienced financial advisers—those with a decade of experience and no adverse findings against them. To stay in the industry, if they've pass the required exam, there will not be a requirement for them to complete up to eight tertiary-level units before 1 January 2026. Since the introduction of this requirement, the number of practising financial advisors has dropped from 28,000 at its peak to approximately 16,300 now. Also, many new financial advisors have been unable to, or for technical reasons have been prevented from, joining the industry. In order to address the short supply of financial advisors, this government will not be making it harder for those who have done the right thing, and will act in the best interests of consumers. That's why we will be encouraging more competition in clearing and settlement cash entities. As I'm sure many year 12 economics students around the country will tell you, competition is good for the market but also good for the consumer. It leads to better prices and better outcomes. The only one who wins in a monopoly is the monopoly, and it is the same when it comes to clearing and settlement services.

In order to make a more competitive and fairer environment, we have followed the recommendations made by the Council of Financial Regulators. We've heard the calls to empower the Australian Securities and Investments Commission as well as the Australian Competition and Consumer Commission. This legislation will give ASIC the ability to put in place rules to ensure that consumer outcomes are protected from monopoly abuse and to oversee any competition that may develop. It will also strengthen the ACCC to enable it to arbitrate and produce binding decisions to protect consumers from price gouging and stop providers from abusing their share of the market.

Consumers already have enough to worry about, and that is why the Albanese Labor government will protect them and reduce their burden. This is also seen in the bill through improving the flexibility of the First Home Super Saver Scheme. Trying to buy a home is stressful enough, so we are making multiple amendments to previous tax legislation to avoid seriously punishing first-home buyers. This will allow them to correct mistakes made during the release process of the First Home Super Saver Scheme. We will be improving the scheme so that individuals can amend and revoke their applications to have funds released without being prevented from reapplying in the future.

I know that all the schedules of the bill have been the subject of consultations with stakeholders and other interested bodies. The government and the Minister for Financial Services has, as the government does with all changes, listened and considered all submissions. We will increase the period in which first-home buyers can request a release authority after entering into a contract to purchase or construct a home, from 14 to 90 days. It is laudable that this government has worked to provide more rigorous and extensive reforms to the financial industry, to protect consumers while also recognising where to show discretion, to understand the pressures that everyday people are under and to make it easier for them to manage their finances.

The Albanese government has always recognised that its duty is to everyday Australians: to keep them safe, to give them access to information, to ensure that their industries are well maintained and regulated, and to give them the opportunities to improve their lives. I commend the bill to the House.

Jerome Laxale (Bennelong, Australian Labor Party) Share this | Link to 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.

David Smith (Bean, Australian Labor Party) Share this | Link to this | Hansard source

I also speak on the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023. We know the importance of integrity, in proper governance, to the broader economy. At its foundation, the national economic environment requires effective laws and regulation, and confidence in our governments and in this place. We want an economy that works for all in the community, an economy where no-one is held back and no-one is left behind. We want growth in the economy that is inclusive.

As the OECD notes, on the importance of inclusive growth, we want growth that is 'distributed fairly across society and creates opportunities for all'. We also know that a safe, well-regulated consumer market for credit products is a core element of a strong and inclusive economy. Credit products do have a role to play. We want people to feel more motivated and involved with the benefits of economic growth. We are making our tax systems fairer and more effective. We are creating a business environment that improves our communities and helps repair our biodiversity deficit.

Although the items in this legislation can seem a touch dry, they are important. That is why the Albanese government has introduced long-overdue reforms to the regulation of payday lending and consumer leases through the Financial Sector Reform Act 2022. This act implemented the Albanese government's response to the 2016 review of small amount credit contract laws, which included a recommendation to address avoidance behaviour by entities using business models not regulated by the credit act.

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. The provisions in the Financial Sector Reform Act 2022 also extended to the Australian Securities and Investments Commission product intervention orders made under the National Consumer Credit Protection Act 2009, the credit act.

This bill packages together four separate policy measures that aim to improve the regulation of Australia's financial industries. Schedule 1 of the bill prohibits activities that are designed to avoid the application of product intervention orders that relate to a credit facility. Schedule 2 delivers the government's election promise to recognise the experience of veteran financial advisers as equivalent to tertiary qualifications. Schedule 3 gives additional powers to ASIC and the ACCC for the purpose of facilitating competition in the provision of clearing and settlement services for Australian cash equities. Schedule 4 makes technical amendments to improve the flexibility of the First Home Super Saver Scheme.

As noted in the Bills Digest, five consumer advocacy groups made a joint submission to the Treasury in support of the draft bill. They recommended that the government should finalise and present the draft bill to the parliament as a matter of priority. I am sure that these consumer groups would welcome that this debate is progressing today.

I will work through the schedules in more detail. Schedule 1 to this bill ensures that anti-avoidance provisions also apply to ASIC product intervention orders relating to credit products that are made under the Corporations Act2001. ASIC has identified credit products that it has said cause significant detriment and harm, especially to vulnerable consumers, and it has issued several product intervention orders, or PIOs, to address this harm. These product intervention orders were made by ASIC under the Corporations Act 2001—and not the Credit Act—to help ensure that the avoidance behaviour of predatory lenders is adequately captured by the law. But the anti-avoidance provisions in the Financial Sector Reform Act 2022 do not apply to these PIOs. These changes will ensure that anti-avoidance provisions do apply to PIOs made under corporations law. As I said, predatory credit products take advantage of people who are already financially vulnerable and charge them excessive and unreasonable fees and interest. The Albanese government wants to reduce this risk of harm and limit the operation of predatory lenders who are engaged in avoidance behaviours. As noted earlier, we want a safer market for credit products.

Schedule 2 works to recognise the experience in the financial advice industry. The government is committed to an advice industry with strong professional standards that gives Australians access to high-quality financial advice. However, as implemented, the education requirements fail to appropriately recognise the lived experience of financial advisers. The current requirements do not properly balance the desire to professionalise the industry with the benefits of retaining an experienced, skilled workforce. This schedule also delivers an election commitment to ease the education requirement for veteran financial advisers who have at least 10 years experience and an unblemished disciplinary record. If enacted, it will allow veteran advisers to access the experienced provider pathway by making a self-declaration confirming that they meet all the criteria to be an experienced financial advice provider.

We know that since 2019 over 10,000 financial advisers have left the industry, particularly many experienced advisers with no history of misconduct. This serves only to reduce access to quality financial advice. Experienced advisers also make a valuable contribution to the financial advice industry. They play an integral role supervising new entrants during their professional year and sharing their knowledge and experience more broadly across the profession. Importantly, for an inclusive economy, this bill ensures that consumers will continue to have access to quality advice by removing a significant disincentive for experienced advisers to stay in the industry, ensuring instead that a pool of advisers to mentor, supervise and upskill new entrants will remain available. Consumers can be sure of receiving quality advice as those experienced advisers affected by the amendments must have a clean record and pass the financial advisory exam. This is in addition to the broader work of the Albanese government, which will take steps through its Delivering Better Financial Outcomes package to ensure that the five million Australians who are at or near retirement can access quality financial advice. This is important now more than ever.

The success of the superannuation system means that Australians are retiring with more wealth than ever before. The average Australian now has a superannuation balance of around $200,000 at retirement. However, the high cost of providing advice and the declining number of financial advisers means that it's becoming increasingly difficult for all Australians to access helpful information and advice that could make a meaningful difference to their quality of life. Labor will always put the consumer first in financial services. We are the party of the future of financial advice reforms and the party that called for the banking royal commission. This is the focus that we bring to improving access to financial advice.

Schedule 3 covers competition in the clearing and settlement of cash equities. Schedule 3 of the bill implements recommendations made by the Council of Financial Regulators to strengthen regulatory powers and facilitate competitive outcomes in the market for the clearing and settlement of cash equities traded in Australia. The ASX group has a monopoly over these services. The reforms will have significant benefits for businesses, particularly those that rely on ASX's monopoly on clearing and settlement services. 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. The reforms will enable ASIC to write rules relating to governance of clearing and settlement facilities, including rules related to board composition and user input to governance. This will have the additional benefit of allowing ASIC to make rules which apply to the governance of the ASX's CHESS replacement project, the delay of which has resulted in significant cost to the wider industry.

If a competitor does emerge in the provision of cash equities clearing and settlement, ASIC will be able to ensure that competition is safe and effective—for example, by making rules with respect to interoperability between competing clearing and settlement facilities. If a competitor does not emerge, rules will ensure competitive outcomes can still be achieved, by allowing ASIC to make rules regarding the activities, conduct and governance of clearing and settlement facility licensees. This is intended to ensure these services are provided on fair, reasonable, transparent and non-discriminatory terms. Where clearing and settlement services are provided by an entity which enjoys a monopoly or significant market power, arbitration for industry participants that rely on access to clearing and settlement services will be available to resolve any disputes about the terms and conditions of their access, including price. This is intended to be a final but efficient backstop where good-faith commercial negotiation breaks down. It has largely been based on the national access regime in part IIIA of the Competition and Consumer Act 2010, with some changes to improve the efficiency of the arbitration process and provide timely outcomes for all parties.

Schedule 4 deals with First Home Super Saver Scheme changes. As background: the First Home Super Saver Scheme helps boost savings for a first home by allowing an individual to build a deposit inside superannuation, giving them a tax cut. Under the scheme, prospective first home buyers can make personal contributions to superannuation of up to $15,000 a year. Up to $50,000 of these contributions can then be withdrawn to finance a first home. Should an individual decide not to buy a home, personal contributions can be withdrawn, but the person is liable for additional tax to compensate for contributions being made at a concessional rate of tax. Individuals who chose to save for a house deposit via this program have been able to withdraw their deposit from the scheme since 1 July 2018. Problems with the administration of the scheme developed due to the inflexibility in the governing legislation.

On this side of the chamber we know the value of superannuation and the importance of maintaining the integrity of super. The parliament, therefore, needs to make a number of improvements to the operation of the scheme to ensure that it works better for first home buyers. As referenced above, currently the legislation is inflexible and can occasionally result in a poor user experience, which has included some people who have made an error in the application process having their savings locked in superannuation until retirement. These changes will increase the discretion of the Commissioner of Taxation to amend and revoke applications and will allow individuals to withdraw or amend applications prior to release.

Transitional provisions will ensure the technical changes apply to eligible applications made from 1 July 2018. Transitional provisions extend the flexibility provided by the amendments to users who have previously applied to have funds released under the scheme and have since started holding a relevant interest in real property or land. This will provide greater flexibility for first home buyers using the scheme and will help ensure their savings are released.

In conclusion, as I noted at the top of my contribution, we know the importance of integrity and proper governance to the broader economy. At its foundation, the national economic environment requires effective laws, effective regulation and confidence in our governance—confidence in this place. We want an economy that works for all in the community. We want growth in the economy that is inclusive. This bill is about giving confidence to Australian consumers to ensure people are protected from predatory practices and can better access financial advice when they need it.

I commend the bill to the House.

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

I thank all the members who have contributed to this debate. I've had the benefit of being in the chamber while the members for Bean and Bennelong both gave thoughtful and passionate contributions reflecting on the importance of this legislation to constituents within their electorates. I haven't had the benefit of listening to every speech, but those I have listened to have underscored the importance of the reform project. At great risk of causing offence to those members I don't single out, I had the benefit of listening to the contribution of the Chief Government Whip, the member for Lalor, who spoke passionately about the impact that schedule 1 of this bill will have on payday lending, on small amount credit contracts, which is a matter that she has been a passionate advocate for since she entered the parliament in 2013. So I acknowledge that and her longstanding contribution to public policy in that area.

Schedule 1 of 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. As many speakers have said, we know that a well-regulated consumer market for credit products is at the core of a strong economy that works for everyday Australians. That's why the Australian government introduced reforms to the regulation of payday lending. That's why we have a reform project on foot at the moment around buy now, pay later products. All of it is about ensuring we have strong competition but right-size regulation to ensure consumers' interests are protected. That is why the Australian government introduced reforms to payday lending and consumer leases through the Financial Sector Reform Act 2022. These changes gave effect to the government's response to recommendations of the 2006 review of small amount credit contract laws and made a range of recommendations to introduce laws which prohibit avoidance behaviour, and that's what these provisions do.

The 2022 Financial Sector Reform Act introduced anti-avoidance provisions with respect to the Australian Securities and Investments Commission product intervention orders made under the National Consumer Protection Act 2009. This bill simply extends these provisions to similar orders made under the Corporations Law. ASIC has made several product intervention orders under the Corporations Act targeting predatory lending and products causing significant consumer harm. This amendment will quite simply ensure that a person or business cannot respond to a product intervention order by engaging in avoidance activity that is not covered by the order but results in a similar detriment to consumers.

The government has an enormous pro-consumer agenda, and I am very pleased to be leading a significant part of that agenda on behalf of the Albanese government. In addition to the protections that we put in place to help people avoid getting into debt spirals with payday loans and consumer leases, we're standing with consumers to fight back against scammers. I see the enthusiastic member for Lyons in the chamber. I see the member for Lingiari in the chamber, and the member for Fowler in the chamber as well—all passionate.

An honourable member: Werriwa!

I should say the member for Werriwa! I am sure the member for Fowler is passionate about these issues, but not nearly as passionate as the member for Werriwa—I am in regular receipt of her correspondence in advance and advocation of the consumer interests of members in her constituency.

It's a big part of our agenda, whether it is fighting scammers, regulating 'buy now, pay later' products, supporting mitigation in disaster-prone areas, ensuring that the insurance market works efficiently, putting in place a compensation scheme of last resort, or ensuring that we put in place schemes to provide justice for victims of financial misconduct. It's part of a broad agenda and this schedule fits within that.

In addition to all of that, we are working to make financial advice more available and more affordable, and schedule 2 to this bill is a part of that work. If you want a good explanation of why that needs to occur, I refer you to my second reading speech or the excellent contribution made just now by the member for Bennelong, who spoke of members of his constituency who are directly affected by these provisions. Specifically, the amendments will remove a disincentive for experienced advisers to stay in the industry and will assist to stabilise numbers within the financial advisor cohort to ensure that we have a pool of financial advisers to mentor, to supervise and to upskill new financial advisor entrants to the industry. It is important. We need them—we need them now. There are five million Australians at or approaching retirement and they will need access to decent financial advice.

Schedule 3 is going to assist in providing competitive outcomes in the current monopoly provision of clearing and settlement services in Australian equities and related markets, particularly cash equities, to ensure that we have competition and, as it emerges, that it occurs in a safe and effective way. An important part of our microeconomic reform project is an equities market. Schedule 3 to the bill will provide ASIC with a rulemaking power, and the Australian Competition and Consumer Commission with an arbitration power in the event that access disputes are unable to be resolved through normal commercial negotiations. ASIC's rulemaking power will ensure that the monopoly clearing and settlement services are provided on a fair and reasonable, transparent, and non-discriminatory basis—a methodology familiar to those who have been engaged in access regimes for otherwise monopolistic service provision. If competition does emerge, the rules will ensure they are safe and effective.

The ACCC's arbitration powers will ensure that if commercial negotiations for access to clearing and settlement service fail, we can have expedient and biding decisions through an arbitration process to ensure a swift resolution of those commercial disputes. Together, these reforms will give regulators not only greater powers but also the essential powers they need to oversee the conduct of providers of critical financial market infrastructure, and will give industry greater certainty about access to clearing and settlement services, the pricing of those services, and the timeliness of commercial negotiations.

Before I move on to schedule 4, I note that other jurisdictions around the world are well in advance of where Australia is on this. Competition is an effective means of ensuring innovation but it is also an effective means of ensuring we have appropriate price discovery and the right pricing arrangements for the provision of these critical services in an open equities market.

Schedule 4 is essentially about technical savings. The previous government left us with the First Home Super Saver Scheme. It sounded good in theory but in practice was too clunky—it was not effectively working, and in many instances the regulator, in this case the Australian Taxation Commissioner, simply did not have the discretion to resolve otherwise what any normal person would have seen as a straightforward matter of fairness and equity. These amendments will afford the Taxation Commissioner and users of the scheme greater flexibility to correct mistakes and avoid adverse financial outcomes, ensuring that people who access the scheme have a very tax-effective way of getting a high-performance savings product as a sidecar to a superannuation fund, and ensuring that it operates in the way parliament intended it to.

With those brief comments, I once again thank members for their contribution, and I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.