Mark Bishop (WA, Australian Labor Party) Share this | Hansard source

Tomorrow, Wednesday, 26 March, marks the fifth anniversary of one of Australia's most high-profile financial collapses. I refer of course to Storm Financial. There were other great frauds prior to that and there have been many other abuses since. Some of the names I mention—Bankwest, Commonwealth Financial Planning, Trio, Westpoint—are now well-known names that have been involved in financial scandal and financial harm to thousands, indeed tens of thousands, of Australians.

So what I am about to say is not news to anyone, but in this matter of public importance it is worth noting the significance of tomorrow's date, because in the not too distant future we will be inquiring into legislation introduced into the House last week on the Future of Financial Advice reforms. It will go to the Senate economics committee for investigation and, either prior to June or in the second half of this year, we will discuss in this chamber momentous legislation that affects the livelihood, the savings and the retirement of millions of Australians.

The financial scandals of all of those companies that I mentioned in my introduction—Storm Financial, Bankwest, Commonwealth Financial Planning, Trio and Westpoint—were occasioned by greed, fraud, excessive reward and incentivised commission payments to salespeople and those involved for a livelihood in the sale of financial products. All of those financial scandals resulted in heartbreaking loss: the loss of millions of dollars to individual Australians, the loss of assets built up over time and the loss of houses, as well as the breaking up of families, the displacement of children and the ruining of lives. Without exception, each of those scandals could have been prevented and was occasioned by greed and avarice on the part of thousands of individuals who gave out bad advice, unnecessary advice, improper advice and illegal advice. Innocent men and women who were seeking assistance to plan their savings, the purchase of their home, the purchase of an asset or funding to educate their children at school and university lost their life savings. All of it was avoidable and should have been avoided.

Last Friday, as the Minister for Finance and acting Assistant Treasurer advised us at question time, the Assistant Treasurer made a long overdue but still inadequate statement concerning the FoFA legislation repeal and/or amendment. I say the statement that he made last Friday or last Thursday was long overdue because this government for some time has been aware—as has been every member of parliament in this place and the other place—of the growing concern in the Australian community about the government's attempt to backdoor the introduction of commission payments for the sale of financial products. That is backdooring and making conflicted remuneration legal.

I say it was also an inadequate statement because the draft bill, plain and simple, is an election pay-off to five companies—four banks and one financial house, AMP. They are five companies so awash with surplus capital, record dividend payments to shareholders, record market share growth and generally record share prices that their naked greed in exploiting additional revenue streams amazes, surprises and indeed shocks all observers of this industry in Australia.

The opposition—the Labor Party, the party which when in government was responsible for the most breathtaking set of worthwhile financial reforms only two years ago—say upfront in this debate the following: we are opposed to conflicted remuneration and commission-based payments for general financial advice. We say upfront (a) that we are opposed to a situation where financial advisers can earn sales commission and trailing fees from product providers; (b) that, when financial advisers can also receive soft dollar inducements such as overseas education junkets, that is graft and corruption and should not be part of the deal, and we are opposed to that practice; and (c) that financial advisers will not need to tell their clients about these fees or other benefits that they gain for the sale of financial products to those consumers or clients who seek their advice, and we are opposed upfront—two years ago, now and forevermore—to those sorts of practices.

To return to my earlier introductory remarks about extra-large revenue streams for NAB, ANZ, Commonwealth Bank, Westpac Bank and AMP, we say that those new and additional revenue streams for clerks, for tellers, for salespeople, for financial planners and for financial advisers who upscale the sale of financial products without adequate disclosure to consumers or clients are a con. We disapprove of it. We do not want to participate in it.

During a Senate inquiry which has been foreshadowed into this legislation, we will pay close attention to the submissions and the evidence that we gather. On the basis of that inquiry, I will be very, very surprised if the position I foreshadowed at the outset of this discussion is not our permanent position. We are opposed in principle to the amendments sought to be introduced into the House last week and foreshadowed by Senator Cormann on Thursday or Friday of last week in this place.

If the legislation foreshadowed by Senator Cormann is introduced, is passed and becomes law, who wins? We know who the winners are. They are the four banks I named and AMP, commission-based salespeople and retailers of financial products who persuade banks to recommend to customers the sale of their particular product—by that I mean the ABC equity fund as opposed to the DEF equity fund. The people who flog those products either to the banks or to the staff of banks and AMP—who then flog those products to consumers—are the winners, and wholesalers are the same.

Who, interestingly enough, do we glean from public debate, opposes these changes foreshadowed by Senator Cormann? Firstly, National Seniors; secondly, the Council on the Ageing; thirdly, the Choice organisation on behalf of consumers; fourthly, Industry Super Australia on behalf of industry funds with membership in excess of five million Australians. Interestingly enough, there is a fifth group that has come out publicly so far and foreshadowed opposition, the Financial Planning Association. Think about that: seniors, aged people, old people, persons going into their retirement, consumers and workers—blue-collar and white-collar—who are members of industry funds. We are talking not five million, not seven million, not eight million but the best part of 10 million people in this country who, through their representative organisations or their professional associations, have voluntarily foreshadowed without equivocation total opposition to this bill introduced by Senator Cormann this week on behalf of ANZ, Bankwest, NAB, Commonwealth and AMP but on behalf of nobody else. (Time expired)