Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

Thank you very much. We are talking about very important changes to our financial advice laws, which help ensure that we have a robust but efficient financial services system here in Australia—a system where people can have access to high-quality advice they can trust but which also remains affordable.

Sadly, here in Australia, we are very good at red tape. We are the world champions in financial services red tape as a result of some of the changes that Mr Shorten, when minister for financial services, imposed. There is no precedent anywhere in the world, for example, for his requirement imposed on clients of financial advisers to re-sign contracts with their financial adviser on a regular basis. There is no precedent for that anywhere in the world. Mr Shorten as the minister for financial services made us the world champions in financial services red tape.

None of this comes for free. It comes at a cost. It comes at a cost to the economy. It comes at a cost to people saving for their retirement. And for what benefit? The only benefit is a commercial benefit for industry funds that have always waged a campaign against small business financial advisers because they cannot control them.

Small business financial advisers have always focused on the best interests of their clients. Their business model depends on acting in the best interests of their clients in order to keep their customers—do you know why? If a financial adviser does not provide good service to their client, the client will leave. The client will not continue to access services that are not providing quality. But of course, this is where the Labor Party just gets it wrong: the Labor Party thinks that government, through regulation, can eliminate any issue or any problem. You cannot eliminate issues in the economy just by regulation; you can put safeguards in place, but you should not be shutting down the economy.

What are the changes that we actually made? What are the changes that the Senate now wants to disallow today and that some senators are saying they want to deal with today—and that we are saying should only be dealt with next Thursday as a result of the amendment that I have moved, because the implications of this change have to be properly considered? In those regulations, we removed the requirement for an investor to keep re-signing contracts with their adviser on a regular basis. That is the so-called 'opt-in' requirement—which makes us the world champions in financial services red tape. We also said that we wanted to simplify and streamline the additional annual fee disclosure requirement. Instead of imposing that change retrospectively, as the Labor Party ended up doing—which, given all of the legacy systems that are involved here, imposes hundreds of millions of dollars in additional costs on the industry, ultimately borne by consumers, in order to comply with that retrospective change—we said that that should only be a prospective change from 1 July 2013. We also said that we would absolutely keep in place the requirement to act in the best interests of the clients—absolutely intact. The change that we made was to improve certainty around the operation of the best interests duty test—the test that indicates whether or not a financial adviser has discharged that particular obligation. We also felt that it was important that we provide certainty around the provision and availability of scaled advice.

I might just put to the chamber that if you want to go to buy a tyre, you should not be forced to get comprehensive advice on all of the features of the car. If you want to go to buy a tyre, you should be able to agree that you are only going to get advice on the features of the tyre. Now if you want to get financial advice on a particular aspect of your life, you should not be forced to go through a full fact find and to go through a full screen of all of the issues. It is all designed by Labor and by industry funds just to push up the costs so that fewer and fewer people will access advice, and so that more and more people are channelled into industry funds. The Labor Party and industry funds do not want people to access advice, by and large; they want people to stay away from advice—and just to trust industry funds with their money. That is what is behind all this. That is why the Labor Party is fighting so hard to get this up. But this is not the right way to go.

The amendment that I have put forward is eminently sensible. If the Senate is genuinely interested in having a conversation on how our approach can be improved or amended, or if there is a view that the regulatory changes ought to be disallowed, it should not happen today in the way that is envisaged in the motion that was moved by Senator Moore. The Senate should seriously consider supporting my amendment, which would have the effect of dealing with this disallowance motion on 27 November, and dealing with it conclusively on that day, so that there is a proper opportunity to assess all of the implications and all of the consequences of a possible disallowance, and to take corrective action, if and as required in the context of what is proposed. I would have thought that a responsible Senate would take that sort of recommendation on board. What is the rush? Why is it—