Sean Edwards (SA, Liberal Party) Share this | Hansard source

I rise to speak this afternoon on the matter of public importance and the FoFA bills here in this chamber. I take up some of the points that Senator Williams made here earlier when he talked about the terrible damage the reputations of financial planners have suffered on the whole for a number of bad eggs. I think it is probably fair to say that financial adviser associations around the country have been obviously keen to ensure that their reputations are enhanced and they stem any flow of any more bad news about their industry.

The Australian Association of Financial Advisers has been involved in this process for many months and it dealt with the previous government dating back as far as 2011.

I heard this quote earlier:

The Abbott government's decision to wind back Future of Financial Advice reforms is making consumers more vulnerable to dodgy financial advice.

This is the very thing that keeps getting said around here. As Senator Gallacher put it, it is a $1.7-trillion industry and there are many hundreds of millions of dollars going in through contributions every year. So this industry is not fading away. It is not going anywhere.

When the previous government announced the detail of its Future of Financial Advice law change back in April 2011, the coalition's position was very clear. We expressed our concern that investors receiving financial advice would face more red tape, increased costs and reduced choice if those laws were passed in full. Our fundamental concern was and remains that over time fewer Australians would be able to access or afford high-quality financial advice under Labor's FoFA. We made it clear that we supported sensible financial advice reforms which increase access to affordable, high-quality advice as well as transparency, consumer choice and competition. Labor's FoFA changes did not strike the right balance. As the then minister, Bill Shorten—now the Leader of the Opposition—must have known they did not, given he refused to put those FoFA changes through the former government's own required regulatory impact and cost-benefit assessment at the time.

We, however, took to the last election: the complete removal of the requirement for an investor to keep re-signing contracts with their advisers on a regular basis; the simplification and streamlining of the additional annual fee disclosure requirements; and the improvement of the best interests duty. I know there have been a lot of mistruths spread about the watering down of the best interests duty. We also took to the last election certainty around the provision and availability of scaled advice. We and Minister Cormann remain committed to implementing the improvements to the Future of Financial Advice laws we took to the last election. That is what we got elected on.

The two areas which have generated most of the public debate on our proposed changes to financial advice laws centred around two key propositions; both are wrong. There was an inaccurate assertion that we were somehow abolishing or significantly watering down the best interest duty for financial advisers. Even the Australian Association of Financial Advisers welcomed Minister Cormann's release, which said that it will be clear that there are some protections that may have been stripped away or that the best interests duty has been removed. Mr Fox from the AFA said:

The best interest duty is enshrined in section 961B1 and it remains unchanged.

Senator Williams sat on the inquiry that delivered the 500-odd page report into these issues which we are now debating.

It has further supported the best interest test by sections 961G, 961H, 961J and 961L. If you want to go and have a look at that, you will get that on the website of the best interest section. There is no watering down of the best interest duty for financial advisers.

We heard from Senator Whish-Wilson about Nick Leeson, and there is the 'wolf of Wall Street'. There is a recent occurrence in Adelaide, my home city, of an accountant who seems to have defrauded some of his clients of money. It is like a lawyer that steals from his trust account. If there is a clear intention to defraud—to take advantage of somebody else's money or take advantage of somebody else's property—you will not be able to stop them. You have to stop them getting into those businesses or you have to monitor them. That ability has not been watered down at all. I know that organisations like the Commonwealth Bank and Macquarie Private Wealth have all been active in reviewing since January 2013, and are going forward. They have actually sacked people that have not complied with the governance or who have not acted in what they felt was the best interests of their clients.

Like all things in life—you have big companies in the business world; you have second-tier companies; you have small companies; you have privateers—people are going to have to try and work through— (Time expired)