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

Let there be no doubt, this has nothing to do with advancing the interests of consumers. This has everything to do with the Labor Party advancing the commercial interests of the union movement. Under the period of the previous government, the then Minister Shorten did special deals to seek to advance the commercial interests of the union dominated industry funds.

I will explain why, because I had some journalists seize upon comments that I made this morning and ask me to substantiate how it is that I can assert that the then Minister Shorten did this. I will give you just one example. Minister Shorten, at the behest of industry super, has forced clients of small business financial advisers to re-sign contracts with them on a regular basis. Guess who is exempted from that requirement? Industry super funds. Industry super funds providing general or personal advice do not have to get their clients to re-sign contracts.

There is another example. Under FOFA a change that we support is to improve transparency of fee arrangements. We said that we should do it prospectively rather than retrospectively because, given the system changes required to impose the change retrospectively, it is a massive expense which ultimately has to be borne by people across Australia saving for their retirement. The Labor Party ignored it without doing a proper regulatory impact assessment and imposed that cost, completely ignoring the impact that that particular change, retrospectively imposed, would have on retirement savings of people across Australia. But guess who is exempted from disclosing the fees they charge their clients? Guess who is exempted from that particular requirement? Industry super funds. There is an explicit exemption for industry super funds.

Industry super funds can charge a fee across their membership irrespective of whether or not advice is accessed. It is collectively imposed across the membership as a whole. It is not disclosed and is going to be paid by the client irrespective of whether or not they access that advice. Of course there is no requirement for industry funds to re-sign contracts with their clients on a regular basis. That is the hypocrisy that we are dealing with here. The industry super network has worked flat out and has egged on the Labor Party. The Labor Party has coordinated a campaign to ensure that the commercial interests of industry super at the expense of small business financial advisers are pressed ahead.

People talk about victims of financial advisers. Guess what—the requirement to force clients to re-sign contracts with their adviser on a regular basis does not protect anyone from becoming such a victim. The requirement to impose additional fee disclosures retrospectively does not protect anyone from bad financial advice. What protects people from bad financial advice is the requirement to act in the best interests of the client. That requirement and the ban on conflicted remuneration are things that we support and that continue to be in place today. To make this change today in this way would be reckless, unnecessarily disruptive and irresponsible, and it would reflect very badly on the Labor Party on a number of levels but in particular in terms of the process that the Labor Party has chosen to follow.

This is a reform that has been supported by the Senate on two occasions—once in the middle of July and once in early October. Businesses and financial advice plans across Australia had a reasonable expectation that this change to the law would stand, because it had been supported by the parliament as a whole, including the Senate, on two occasions. To proceed in this way is reckless and it is irresponsible. The Senate should pause and give itself time to deal with this matter in an orderly and methodical fashion. There is no reason whatsoever—other than the reason that Senator Abetz has indicated, that the Labor Party is worried that they might lose their precarious majority between now and next week—why this should be rushed. In the ordinary course of events this issue would have to be dealt with conclusively by next Thursday anyway. That would be the proper way to deal with it. This is a significant industry and if the Senate goes down this path it will have a significant impact on people across Australia accessing banking and financial advice services. This is not the way to proceed and I urge the Senate to reject this approach and let the Senate deal with this matter in an orderly and methodical fashion by Thursday next week.