David Fawcett (SA, Liberal Party) Share this | Hansard source

I rise to make a few brief remarks about the Economic References Committee report on the performance of the Australian Securities and Investments Commission. Whilst I am not a permanent member of that committee, I did participate in that particular inquiry because of my role as the chair of the Parliamentary Joint Committee on Corporations and Financial Services, which has a legislative role to oversight ASIC and its work.

This report has hit the media, and people are aware of the case that was used as an example, Commonwealth Bank financial planning. I have spoken to many people in the community and the industry about the report and about the media coverage. One thing I would like to say up-front is that I recognise and want to put on the public record that there are many financial advisers, both in large vertically integrated companies and in small independent operations, who work ethically, who work hard and who work for the best interests of their clients. I think it is important to say that because it is always disappointing to see an entire group of people or an entire profession being mired by the actions of a few.

Whilst there a few who are the cause of the worst action—in the Commonwealth Bank and others; recently Macquarie Bank has been in the news—the report does highlight, from a governance perspective, the role of the regulator and, particularly in the larger organisations, the role of the board, the senior management, the supervisors and the remuneration structures that are put in place. All of those things combine to either encourage or allow certain cultures and behaviours within organisations.

The report had a large number of recommendations. One recommendation in particular that has affected my committee was that we take on an inquiry looking at raising professional standards in the education of financial advisers. We have done that. We have called for submissions and we are starting to receive submissions from people in the industry. That is important because, at the moment, after doing a very brief course, RG146, in under two weeks you can have a qualification that enables you to work in a sector where you are advising people on their life savings, which can run into the tens or hundreds of thousands of dollars or even millions of dollars. I think the ordinary person on the street would expect that somebody who is going to be advising you on those things would have a higher level of training, qualifications and experience if you are going to entrust your life savings to them. I am pleased in that regard to see that, in recent weeks, some of the large financial organisations have come out ahead of our inquiry and said they recognise that they need to professionalise and they are going to start setting some benchmarks and looking at tertiary qualifications as well as ongoing professional development for their members.

The inquiry will have an important job to do to try and coalesce the interests of people who are working in the small independent firms, people in the large integrated firms and people who work in the self-managed superannuation space to make sure that we find a common landing ground for how that would work—who regulates it? Is it going to be regulated by industry? Is it going to be regulated by ASIC? Who sets the standards? Who enforces those? Who oversees ongoing professional development? How do we grandfather people who in some cases have been working very successfully and very ethically in the industry for many years but do not have a tertiary qualification? How do we bring them in? There is a body of work to do and I look forward to that engagement.

I do want to make the point that the report has provided for my committee, for ASIC and for industry a wealth of information about things that can go wrong in the governance of an organisation and in the oversight of the regulator. One of the things that my committee is doing, which I will be working with ASIC to do, is going through that report and identifying—not just the recommendations, but looking at the submissions and looking at the discussion by the committee—all the various aspects of behaviour, of governance, of how the regulator oversees the industry, to see what it is that we can learn. What is it that we can adapt, change or improve so that we reduce the burden of regulation whilst, at the same time, improve the quality of the outcomes? For the consumer the quality of the outcomes that we are looking for is advice around their financial circumstances that is suitable for them, widely available, and affordable.

I know that the financial services inquiry is also looking at some of these areas and is even looking at things like the structures of the financial services sector and whether the existing structures are right. It is an area that is in considerable flux at the moment. As a government, we have a dual responsibility where we have to seek to change but not for change sake, because every change we make has a flowthrough cost for industry. Every time there is a change in regulation the impact for those in back of house to their systems, their training, their IT systems, their personnel, is huge and can cost, in some cases I am told, into the hundreds of thousands of dollars if not millions of dollars in terms of whole-of-system changes. We have to be very careful that the changes we make are needed and are targeted so that we achieve the outcome for the consumer without increasing regulation, without dampening competition and without putting unfair impost on the industry.

I would like to commend the secretariat of the committee who took evidence from a wide range of people both from the industry and from those who had been affected by poor financial advice. I would like to thank the officers from ASIC. ASIC comes in for a fair hiding at different times. The public expectations of what they should be doing in a whole range of areas—whether it be information, enforcement, auditing or investigations—are very high. Yet they are an organisation with a limited capacity. I have seen a willingness to increase their learning on how they respond to and how they react to, for example, whistleblowers and to things like enforcement and increased transparency. There is a range of people here who have contributed to what this report represents. It provides a good basis for ongoing development work by the parliament, by ASIC and by industry, all of which, I trust, will be to the benefit of the consumers in Australia who need this financial advice to plan and to provide for their future. I seek leave to continue my remarks.

Leave granted; debate adjourned.