Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

I thank Senator Madigan for that question and for some notice of it, and also for his genuine interest in this important area of public policy. Firstly, let me reassure Senator Madigan that we are not proposing to reopen any loopholes. We are working to ensure that low- and middle-income earners across Australia can have affordable access to high-quality financial advice they can trust, by removing unnecessary and costly red tape which pushes up the cost of advice without delivering proportionate improvements in consumer protections. Secondly, the requirement for financial advisers to act in the best interests of their clients remains in full and unamended. Thirdly, the ban on conflicted remuneration remains in full.

Let me direct Senator Madigan to my release on the Future of Financial Advice law changes last Friday when I said:

The Government has supported the ban on commissions and conflicted remuneration for financial advisers since it was first legislated. At no point has the Government sought to re-introduce commissions or conflicted remuneration for financial advisers.

My announcement last Friday of course also made it very clear that employees of financial product providers could not receive either up-front or trailing commissions as a reward or an incentive for product sales related to general advice they have provided. In fact, we went even further by stating that we would explicitly prohibit, in regulations and the legislation, any payment made solely because a financial product of a class in relation to which the general advice is given has been issued or sold to the client and any recurring payment made because the person has given the general advice. We are not proposing, however, to ban all remuneration for services provided. I do not think that anyone would seriously suggest that we should do this. Indeed, even Minister Shorten, when he introduced the FoFA laws in his second reading speech, said:

If … a particular stream of income does not conflict advice, then these reforms do not prevent them from receiving that income.

All of our changes are consistent with that statement. (Time expired)