Arthur Sinodinos (NSW, Liberal Party, Assistant Treasurer) Share this | Hansard source

I thank Senator Madigan for his question, of which I did have some notice. For the benefit of the Senate, Senator Madigan is referring to the Future of Financial Advice reforms, to which this government is to introduce amendments in the near future. I announced those amendments before Christmas. Part of those amendments were to do with what are called the grandfathering provisions and related to conflicted remuneration. This is in relation to commissions and other such payments where there is a potential conflict of interest between the interests of the adviser and the interests of the person receiving the advice. Under the current legislation, adviser movements have been reduced. They have effectively been frozen in the market, because existing conflicted remuneration had been grandfathered. So advisers thought that by moving to work for someone else, or by setting up their own business, they would lose that trail of commissions. What we have done is to say that that will not happen. We will remove that particular provision. But this will not disadvantage consumers because in due course, as the financial circumstances of investors change, under what is known as the best interests duty, the adviser must put the interests of the investor first and change their advice, which means they may put the investor on a new financial platform or provide a new service. In that case, the commission ends and then they are on a purely fee-for-service arrangement.

In relation to what Senator Madigan is asking, we are seeking to promote mobility within the industry because there had been feedback—ever since the previous government's reforms—that mobility was being frozen within industry and that there was indeed a potential shortage of advisers starting to occur— (Time expired)