Alex Gallacher (SA, Australian Labor Party) Share this | Hansard source

I rise to also take note of the answer given by Senator Cormann to Senator O'Neill's question. I think there is a lot of political argy-bargy, red tape, no red tape, 'make it easier' and 'make it cheaper'. But I wanted to address a couple of things first. It has been made very, very clear in Senate estimates that ASIC has identified a systemic problem in financial planning. Up to 20 per cent of planners have given conflicted and potentially illegal advice as a result of their shadow shopping exercises. We also know that a great proportion of the superannuation industry at the moment—the exponentially growing sector of self-managed super funds—is regulated by the ATO. We also know that the finance minister and Assistant Treasurer has made cuts to the ATO. In this area of alleged budget emergency, there have been over 1,000 jobs cut at the ATO. In questioning at Senate estimates about what impact that would have on regulation of superannuation, particularly self-managed funds, it was very, very clear that there are not enough people to do it.

The Assistant Treasurer and finance minister has cut 1,000 jobs out of the Public Service when they actually generate $6 of income in an area of budget emergency—totally irrational stuff. Can the industry self-regulate? Clearly not, because the economics committee found in its inquiry that the Commonwealth Bank did not deal honestly with the regulator, ASIC. ASIC is on the record as saying, 'The Commonwealth Bank did not deal honestly with us.' Therefore, many thousands of people—which, if the media is correct, include the Treasurer's mother and the parents of another member of the House of Representatives—have lost substantial funds under the regulatory system as it currently stands. To classify all of that as red tape—that is a factual situation. I am not making a political argument here. I am repeating facts that have been presented to the Senate in estimates and facts which have come out of a very substantial inquiry into the financial sector. To have it all blown up as 'it is all red tape' and saying that we are the world champions of red tape—I am not sure that the Treasurer's mother or the parents of the honourable member in the other House would accept that as an argument. We really do not think there is a huge impost on people to have a best-interest duty, requiring advisors to get their clients to opt in to receive ongoing service every two years. We do not think that is red-tape world championship material or that it is all that onerous. An annual disclosure—statements to be sent to clients annually disclosing fees and details of services performed—sounds like common sense. And a ban on conflicted remuneration.

It has been stated in this chamber by Senator Cormann and others that they are not lifting that. But we believe there will be a partial lifting of the ban on conflicted remuneration. It will be opened up. The definition is, I think, 'personal advice and not general advice'. So there is a sleight of hand there which will allow those experts in this field to take advantage of conflicted remuneration. I think that most workers will not get too many financial plans in their lives. The stat that is thrown out here is that only one in five get a financial plan. If you are on award wages and you are getting the superannuation guarantee, you do not necessarily need a financial planner to tell you to pay your house off and keep going in super. But that one-off opportunity when people come close to retirement, they have got a nest egg, they need to get their affairs in order, they should be assured that they are going to a financial planner who has got fair dinkum and good, solid regulations applying to them. The opportunity is for those people to take some conflicted remuneration and steer people the wrong way. If we look backwards, there is an evidence trail that people have been given wrong, conflicted and bad advice, and it has cost them very dearly. This chamber should not have supported—unfortunately, it did yesterday—an avenue for that to be exploited in the future. (Time expired)