David Bushby (Tasmania, Liberal Party) Share this | Hansard source

I listened closely to Senator Dastyari's comments. Clearly, he did not listen closely to the comments that Senator Edwards and, before him, Senator Williams made, because it is absolutely clear that the proposals that the government have in relation to FoFA will not dismantle consumer protections, do not wind back essential protections for consumers on financial advice and specifically and deliberately do not allow the return of practices outlawed under FoFA, which caused very dire outcomes for many victims due to the misconduct of financial advisers that we saw in recent years.

Similarly, I had listened to Senator Gallacher. He talked about the shadow shopping exercise undertaken by ASIC. The FoFA reforms do not impact on the quality of the advice that financial advisers give. Those reforms were aimed at impacting misconduct or incentivising poor, deliberate behaviour that was not in the best interests of clients. Quality is a matter of competence and, unfortunately, there remains in most industries issues of competence with professionals. I would note in that regard that some of the recommendations that were contained in the recent economics inquiry report into the performance of ASIC, referred to by Senator Dastyari not long ago, will help to address some of the issues of competence in the financial services industry.

That raises the threshold question in this debate about the value to Australians of the financial advice industry. We have to question whether we want to have good quality advice available to as many Australians as possible. The chair of ASIC, Mr Greg Medcraft, had an opinion on that. He noted that only about 20 per cent of adult Australians over their lifetime have access to financial advice. He thinks that more like 50 per cent of Australians would benefit from having quality financial advice. I tend to agree with him. I think Australians having access to good quality financial advice is a good thing and, if they can get hold of that, it makes their financial lives while they are working and also in retirement a lot easier. If you accept that is the case, then you have to look at the question: what regulation do we need to maximise the likelihood that we will have good quality advice? As I mentioned, some of the recommendations in the economics committee inquiry into ASIC addressed some of those things. But, a few years back, the Joint Committee on Corporations and Financial Services held a very detailed inquiry into the financial advice industry, following the very high profile collapse of financial advice firms such as Storm Financial, Trio and Westpoint which resulted in many victims losing an awful lot of money and in almost all cases we saw misconduct by the people involved. That inquiry was very comprehensive, in-depth and went on for some time. I am pleased to note that the inquiry's findings of the joint committee were unanimous. All senators and members who took part in that inquiry came up with the same conclusion and a long list of recommendations of changes that could be put in place which would improve the operations of the financial advice industry and increase the likelihood that Australians who receive advice from financial advisers would get high-quality advice that is of good value to them.

What happened subsequently? Well, subsequently, the government took the recommendations from the joint committee, which were unanimous, supported by the coalition, the then opposition, as well as the then Labor government. They turned that into their Future of Financial Advice legislation. But the Future of Financial Advice legislation differed significantly from the recommendations of the joint committee—differed significantly in ways that mattered. As a result, the then opposition, the coalition, did not join in with the majority chair's report on that legislation and put in a dissenting report. Essentially, that dissenting report reflected the differences between what the unanimous joint committee report decided and the changes that the then government put in place in their legislation. One example of that is the opt-in requirement that is now in the FoFA laws. That was not included in the Ripoll recommendations. Indeed, there was only one submission that even raised the possibility of opt-in with the joint committee inquiry, and that, of course, was Industry Super Australia, who clearly got their wish when the government put it into the legislation.

We delivered the dissenting report on the government's legislation at the time, which, at its heart, reflected the differences between the recommendations of the joint committee, commonly known as the Ripoll inquiry, and what the government actually delivered in terms of its legislation. Subsequent to that, we took to the election the promise that we would make changes to the government's FoFA legislation as enacted in order to get it closer to what we indicated in our dissenting report, which would better reflect the findings of the Ripoll inquiry.

What are we talking about here? What are the concerns that our senators had in the dissenting report—the concerns that are reflected in our election promise that we took to the last election—and what we are trying to achieve here now? We are concerned about the level of misinformation about the government's improvements to FoFA by Labor and the Greens on our changes. The government's FoFA improvements do not water down consumer protections. That is an absolute fallacy. The government is keeping the consumer protections that actually make a difference to consumers, such as the requirements for advisers to act in the best interest of their clients, which remains specifically in the legislation, and the ban on conflicted remuneration continues. The remuneration that is offered, which has any potential at all to affect the advice that is being given, is banned and remains banned under the changes that we propose. The government is removing unnecessary and costly red tape and uncertainty to ensure there is access to high-quality advice that people can trust and that is affordable. That is important—if we are ever going to get to the 50 per cent of the Australian population receiving financial advice, we need to ensure that it remains affordable.