Marise Payne (NSW, Liberal Party, Shadow Minister for COAG) Share this | Hansard source

As other senators on this side of the chamber have indicated, the coalition is not able to support the Corporations Amendment (Future of Financial Advice) Bill 2012 and the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2012 in their current form. It is extraordinary that these bills are subject to the guillotine agreed to by the Australian Greens in this chamber. They have been the subject of much discussion and debate among the professionals of the financial services sector and I would have thought merited far more engaged and extended consideration by this chamberthan they are being given by the government. It is profoundly disappointing to see the government treat such an important sector in this dismissive fashion.

This legislation is vital to so many people, not just to people working in the sector but to those who are recipients of advice. In my work across Western Sydney in particular and more broadly concerns have been raised about this legislation. To see it guillotined in the way it is being done this week is profoundly disappointing. We have indicated through our shadow assistant Treasurer, Senator Cormann, that we believe this legislation can be significantly improved if a series of amendments, which we intend to move in this debate, are accepted by the government.

I am not speaking from no background on this issue, although most senators would be aware that the financial services sector is not one in which I have had a professional involvement, but with the support and assistance of Senator Cormann I have made some effort in recent times to meet with financial planners in key centres in Western Sydney, in Parramatta and in Penrith. We held a series of roundtable discussions with participants in the industry. The view of those forums was universal. The financial planners and members of their staff were most concerned that the reforms in their current form would be detrimental to the industry and also to clients of the industry. They were very concerned that the government is pursuing changes that will unnecessarily increase red tape in this industry. We are at great pains—and I know Senator Sinodinos has made a number of comments in relation to this—to look at parts of the economy where we can reduce the impact of red tape on small business, which drives up their costs and therefore drives up costs to consumers. These sorts of changes—for example, forcing consumers to re-signed contracts with their advisers every two years—are examples of going in entirely the wrong direction. In both Penrith and Parramatta, these are the sorts of issues which have been raised with us.

Senator Cormann said after the roundtable discussions that we are very much aware that there needs to be robust regulation protecting consumers, but this government is imposing so much red tape and regulatory burden that it is making financial advice unaffordable and unnecessarily complex. In our view, the package in its current form is legislation that will make life most unclear and unnecessarily complex. It is expected that financial planners will not be able to maintain their current staff levels, and this is not a time at which we need to see people losing their jobs, frankly.

We are also very concerned about this legislation locking in an unlevel playing field amongst advisers that will favour a business model that is more government friendly than private-sector friendly. These are points I know other senators have made, both last night and today. The concerns also extend to the cost of compliance with and implementation of the new requirements of this legislation. The industry estimates on that are quite significant—quite overwhelming, in fact. It seems to me that if you were wanting to impose such significant burdens on an industry then you would think that the Senate would be more minded to discuss the legislation in proper form, not in guillotined form, and that is particularly disappointing.

In our amendments, which I know have also been addressed by Senator Cormann, we will be advancing the case that the government should be required by parliament to table a regulatory impact statement on the FoFA assessed as compliant by the government's Office of Best Practice Regulation, that we will remove the opt-in provisions from this legislation, that we will also move to remove the retrospective application of the additional annual fee disclosure requirement and that we seriously think the best-interest-duty drafting can be improved and will be making some suggestions in that regard. A constructive government that wishes to engage in proper parliamentary debate would, in our view, consider those seriously and undertake to look properly at those amendments. It remains to be seen whether, given the way the guillotine has been imposed on this legislation, that will actually be done. We also are of the view that the ban on commissions on risk insurance inside superannuation should be further refined. As Senator Macdonald and other senators have pointed out, we were very concerned about the timing of the implementation and actively called for an implementation date not of 1 July 2012—in less than a couple of weeks time—but of 1 July 2013, and other senators have indicated the change in that regard.

The sorts of amendments we are advancing in this debate have been carefully considered by the coalition members of the Parliamentary Joint Committee on Corporations and Financial Services, and that is not a consideration they have taken lightly. The government, the Australian Greens and those senators on the crossbenches who are considering this legislation should, I think, be able to have a proper opportunity to give those amendments serious consideration and, one would hope, to support them. In fact, it will be ironic in the extreme if the two fora I held in Western Sydney—in Parramatta and Penrith—with Senator Cormann lasted longer than will the actual consideration of the serious aspects of this legislation, given the nature of the government's approach. I do not think this legislation warrants execution by the guillotine, and I think it is most unfortunate that the choice was for it to be treated like that.

We have also indicated that if the changes we advocate, to which I have referred and which will be put before the chamber, are not supported by the government and the Australian Greens then we will undertake—and I know Senator Cormann has already—to fix the FoFA by implementing these amendments if we are in a position to win government at a future date. In our view it will be an unsustainable proposition for it to continue in its current form if it is adopted in that form by the government and by the Australian Greens in this chamber. Our improvements to the system would include the following measures. We would completely remove the opt-in provision, which I have referred to; we would simplify and streamline the additional annual fee disclosure requirements; we would improve the best-interest-duty aspect; we would redraft to provide greater certainty around the provision and accessibility of scaled advice; and we would refine the ban on commissions on risk insurance inside superannuation. Those are points we are very concerned about. They are exactly the sorts of points that small business owners, financial planners in suburban Sydney—in Western Sydney, in Parramatta and Penrith—raised directly with us. This is feedback from professionals who are working in the area—feedback that they have also received from their clients as they have discussed the development of this legislation.

As I saw in those particular fora, and as I see regularly in organisations like chambers of commerce and in women's organisations in the community—where women who are involved in the financial services sector offer help and support to other women who are working in small businesses, either in start-up or just sustaining themselves in the current economy—the financial services industry provides a very important service. It is about helping Australians to build wealth and to plan for their future. There is no argument from us, for example, that financial planners are dealing with other people's money, and so there is a need for a robust regulatory framework. That is not the case we are arguing here today. The goals should be to protect consumers—which is perfectly appropriate and perfectly reasonable and something that we enthusiastically advocate—and to enable access to high-quality financial services that are both affordable and understandable. Our concern with this legislation is that it will make the whole financial services environment unnecessarily complex and completely unclear. How does that assist consumers? How does that enable financial services professionals to deliver the sort of high-quality service they need? It does not help in any way. It is another effort by this government to cloud a professional environment and to make life harder for the recipients of service and for the deliverers of the service.

We are talking about a financial services industry. The Financial Services Council had a function here in Parliament House just last night, with its chair and CEO, which both Mr Shorten and Senator Cormann attended and at which they both spoke. We know we are talking about an industry that performed quite well given the stress following the GFC. It is an industry that goes to the core of the operation of small business in so many parts of Australia. So when we legislated in 2001, in the period of the Howard government, we provided a solid regulatory foundation for the industry. There is no denying that we are always able to improve in that regard, but what we should be focusing on is making business simpler—not gratuitously more complex and not gratuitously overregulated. We should not be making regulation for its own sake. We should not be trying to make the system more complex and costly without adding anything useful to what is already a robust regulatory framework. That is the concern which has been raised by many of the participants in the industry with whom I have met and to whom I speak.

I heard Senator Macdonald, at the beginning of his remarks today, acknowledging a number of issues concerning the collapse, in the wake of the GFC, of companies such as Storm Financial, Westpoint and so on. It was particularly important for our policymakers to be able to assess what went wrong and what could be done to improve the system. It was therefore timely that parliament, in February 2009, asked the Parliamentary Joint Committee on Corporations and Financial Services to conduct a comprehensive inquiry into Australian financial products and services. I know that, over time, a number of my colleagues here have been members of this very important parliamentary committee. The Ripoll inquiry, as it became known—after its chair, Mr Ripoll—reported back in November 2009 and made a number of prudent recommendations. A number of those have been raised in discussions with professionals in the industry.

The centrepiece of the report was the recommendation to introduce a fiduciary duty for financial planners, requiring them to place the interests of their clients ahead of their own. It also provided a good blueprint, a blueprint the government could well have adopted. If it had done so, it would have had bipartisan support. We are all aware that that is not always the case for reports tabled in this chamber and in the other place. But, for this report, it was the case that it would have had bipartisan support. The key observation of the report was:

The committee is of the general view that situations where investors lose their entire savings because of poor financial advice are more often a problem of enforcing existing regulations, rather than being due to regulatory inadequacy. Where financial advisers are operating outside regulatory parameters, the consequences of those actions should not necessarily be attributed to the content of the regulations.

I think that is an important point for this chamber to note. But, instead of pursuing the recommendations of the Ripoll inquiry report, it seems to us that the government has basically allowed this particular package of legislation to be hijacked by what could only be described as vested interests—and I say that with some disappointment.

Over the past couple of years, the industry have also experienced frequent unexpected changes to the proposed regulatory arrangements under FoFA right up until, literally, the introduction of the current legislation. It has been a very difficult path for them to tread—to try to work out for themselves what the impacts on their own businesses are going to be and what the impacts on their clients are going to be. That sort of uncertainty does nothing whatsoever to support the operation of a business. It makes it hard for the industry to work out what the costs of compliance will be, what the costs of implementation will be and what the impact on the people receiving their services will be. And those changes to the proposed regulatory arrangements have occurred without any proper assessment of the costs involved or any real consideration of the unintended consequences. We have also seen quite important financial advice reforms delayed by up to two years to allow the government to press ahead with the sorts of contentious issues it has decided to pursue.

We have before us today a very important piece of legislation. We have a piece of legislation which impacts upon the business operations of the financial services industry, an industry which employs thousands and thousands of Australians. Just as importantly, and some might even say more importantly, we have a piece of legislation which will impact on the consumers of the financial services industry product—the advice the industry provides. We are not persuaded that the government have done this the correct way. We are not persuaded that the government's legislation responds to the real and legitimate concerns which it should have addressed—they appear to have been diverted by the pursuit of other interests. We are not persuaded that the legislation as it stands will adequately deal with those issues and, to redress that, the coalition will be proposing, as Senator Cormann has flagged, a significant number of amendments.

Most importantly, though, we are not persuaded that this is an appropriate way for this chamber to deal with such important legislation. It is not right that important legislation is subjected to the type of guillotine that the government and the Australian Greens have agreed on to push this and numerous other bills through this chamber in a relatively short period of time, this week and next. The participants in the industry deserve better, their clients deserve better and the Australian people deserve better.