Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Senator Muir, and Senator Lambie, to her credit, said what is important here tonight—that is, what is in the public interest. Whatever you think of this FoFA debate, the major consumer group in this country Choice and the two major groups that represent seniors are arguably those who have been most impacted by financial scandals and they are not happy with the government's amendments to FoFA. That is a fact and nothing is going to change that—they are not happy. So it is very important to note that in line with what Senator Muir is going to talk about with the advice from the committee on the regulations, which I will not go into myself, these regulations were rushed through prior to 30 June and they would not have passed this place if they had been put in the form of legislation, and that is because we have significant concerns with the changes and the watering down of financial advice laws in this country. I would like to put it in my words, in layman's terms, why FoFA and why the FoFA laws are important.

They were designed to send a very clear message to consumers who need to get financial advice. Let us all be clear: the more Australians who get good, independent financial advice the better because it helps them manage for their future and has all sorts of flow-through effects on the economy. It was designed to get good financial advice to as many people as possible. And that needed trust, the glue that would bring the Australian people into the offices of financial planners, be they big financial planners or small financial planners. That glue was missing because of the large financial scandals, which we cannot ignore are a reality. They occurred around the world in the GFC and of course they have occurred here with a number of very high profile blow-ups.

These laws were designed after four or five years of consultation—and I have to hand it to Labor; they championed these laws—and they were designed to send a big message. Perhaps in some people's view that message was overkill, that maybe financial planners had to do more paperwork, that it might have impacted on their cost of doing business. From my point of view, that cost was outweighed by the potential cost of a person or a family losing their life savings because of the risks from poor financial advice.

One of the key risks from poor financial advice was advisers selling products to people that were not necessarily in their financial interest. I would argue against Senator Cormann that that has not really been changed in his regulations or in his attempt to actually change the FoFA legislation or the amendments. I argue that that incentive is still fundamentally in place. Although we can argue about what is a commission and what is not a commission, a sales-based culture still exists in a number of the large financial services companies.

I would like to address the issue of small business very quickly. Unlike a lot of the senators who have spoken tonight about the impact on small business, I have met with dozens of small financial planners during the FoFA legislation and I listened to what they had to say. It actually informed my view and the Greens dissenting report. I can tell you that amongst all the financial planners I met, some had their licences through big financial services companies and some were genuinely independent, they all disagreed on various aspects of FoFA, whether it was opt-in, a catch-all phrase or what was conflicted remuneration—they all had different views. Some were okay with the FoFA laws as they stood; others wanted different things changed. I know that their association has put out a media release today saying all sorts of negative things about what we are discussing here today. But I know that I can sleep well tonight because I have spoken to these businesses.

I have also worked in a large bank. I have been part of a sales-based culture. I have a lot of friends still working in banks and I do not think that sales-based culture has changed. There is nothing necessarily wrong with a sales-based culture but there is something wrong with a culture that still has inbuilt conflicts of interest, where it is in an adviser's interest to recommend a product. That is still in place.