Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Hansard source

I rise to speak on the Corporations Amendment (Future of Financial Advice) Bill 2012 and the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012. The coalition will not be supporting the Future of Financial Advice bills in their current form. As has been outlined by other speakers, this legislation could have been significantly improved if the government had accepted a series of amendments that will be moved by the coalition. Certainly with those amendments there would be a strong case for this legislation to be worth supporting.

The FoFA package of legislation in its current form suffers from a number of deficiencies. It is certainly unnecessarily complex and, in large parts, very unclear. It is expected to increase levels of unemployment in the sector and it legislates to enshrine, regrettably, an unlevel playing field amongst advice providers, inappropriately favouring a government-friendly business model. Most importantly, it is likely to cost about $700 million to implement and a further $350 million per annum to comply with, according to conservative industry estimates.

As I have indicated, as it currently stands, this legislation will lead to increased costs and, most importantly, will reduce choice for Australians seeking financial advice, and in that category are many older Australians, for whom I have a particular interest in my shadow Ageing portfolio. As I have indicated, the coalition will be moving a series of amendments, the most important of which are as follows: that the government be required by parliament to table a regulatory impact statement on FoFA, assessed as compliant by the government's Office of Best Practice Regulation; that the opt-in provisions be removed from FoFA; that the retrospective application of the additional annual fee disclosure requirements also be removed from the legislation; that the drafting of the best interest duty provisions be improved; that the ban on commissions on risk insurance inside superannuation be further refined; and that the implementation of the FoFA legislation be delayed until 1 July 2013 to align it with MySuper.

These recommendations were part of the amendments suggested by coalition members of the Parliamentary Joint Committee on Corporations and Financial Services. Crossbench senators should seriously consider these amendments and support them. These are important and sensible coalition amendments and, if they are not supported by the government, the coalition, if it is successful at the next federal election, will fix both bills by implementing these amendments. In particular we would completely remove the opt-in provisions, simplify and streamline the additional annual fee disclosure requirements, improve the best interest duty, provide certainty around the provision and accessibility of scaled advice and refine the ban on commissions on risk insurance inside superannuation.

These bills, of course, received examination by the economics committee, and I would like to go to their report of March 2012 to pick up some of the points and some of the concerns raised, particularly in the dissenting report by coalition senators. In making their comments, coalition senators recognised that the financial services and advice industry provides an important service in helping Australians with their financial health and wellbeing, and, as I indicated earlier, many of those are older Australians. Of course, financial advisers help Australians to better manage their financial risks and maximise their financial opportunities. They are dealing with other people's money, and that is why it is important that the regulatory framework that regulates their activities not only is an effective one but also balances the need for effective consumer protection with the need to ensure that the financial advice and the financial services that are provided are of high quality and that that high-quality advice remains accessible, remains available and also remains affordable. Certainly when you look at the financial reforms and particularly the financial reforms that were legislated by the coalition when we were in government in 2001, they did provide a solid regulatory foundation for our financial services industry. I think that that solid foundation and framework stood us in good stead in relation to the global financial crisis. But, as coalition senators indicated, there is always room for improvement.

Any change that should be considered is not about making things more complex; it is about making things better. Therefore, in any change—and this is really where the concern from the coalition side is in relation to these proposed changes—we need to avoid more regulation or avoid regulation overreach, as coalition senators indicated in their dissenting report, where this leads to increased red tape and in turn results in increased costs for business and consumers without in the end affording them any greater consumer protection.

As we know, in the wake of the global financial crisis there were a number of high-profile collapses of financial service providers across Australia, such as Storm Financial, Trio and Westpoint. After those collapses it is very important to look at what went wrong, and I will come to some of those issues, in particular in relation to Trio, where I want to highlight in particular the work that is currently being done by the victims of financial fraud. Many of those who suffered are from the Illawarra, which is where my electorate office is, and I have had representations from those people. In the Illawarra it certainly led to a lot of very sad stories in relation to the consequences of those investments and the financial collapse. It may be said that this legislation could have avoided the Trio collapse, but, as Senator Cormann and other senators have indicated, it would not have done so.

Can I now look at February 2009, when this parliament asked the Parliamentary Joint Committee on Corporations and Financial Services to conduct a comprehensive inquiry into Australian financial products. That inquiry has become known as the Ripoll inquiry, after its chair, Bernie—