Andrew Bragg (NSW, Liberal Party) Share this | Hansard source

The Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 is a great example of our government getting on with the job of implementing the Hayne royal commission. Over the next year or so in this place, we can expect to see a lot of legislation. In fact, I would say that you will see more legislation relating to that review than you would see across almost the whole government. This is very much the long kiss goodnight to commissions, and especially in respect of commissions that have been paid on the back of compulsory super. That is a very good thing. I think there have been many instances where people have, in fact, been paid handsomely with an annuity payment stream for not really doing a lot of work. As Senator Whish-Wilson has pointed out, it was the 2010 so-called Ripoll inquiry's recommendation 4 which simply said:

The committee recommends that government consult with and support industry in developing the most appropriate mechanism by which to cease payments from financial product manufacturers to financial advisers.

That was 10 years ago. I think that's important to put on the record. I understand—and I respect that there will be some consternation within the financial advisory sector—about the loss of these revenues. But the reality is this was at the end of 2009 and we're now in 2019, so there's very much been a long kiss goodnight.

If anyone was unsure about what the Hayne royal commission was all about, it very much focused on the systemic malfeasance in the wealth management sector, which I think had shocked many people. I think many people, including myself, who had opposed a royal commission were made to think very carefully about what was presented to that inquiry. People talk about a banking royal commission a lot, but it was, in fact, significantly weighted towards malfeasance in wealth management. I think there was a culture whereby people were able to effectively take this money and not do a whole lot of work, which Hayne himself pointed out in the section on fee for no service. He pointed out that there could be no justification, effectively, for this sort of behaviour.

We have acted swiftly to implement this review, this very significant body of work presented by Commissioner Hayne. As I said, the scale of the malfeasance in the wealth management sector has shocked many, myself included, and this bill basically puts an end to these payments over the next two years. I'll repeat it again for the record: I understand that there will be some financial advisers who will feel aggrieved about that, but the fact is our government have shown, I think very credibly, that we are absolutely on the side of the worker, the saver and the retiree. It was very important to demonstrate that there could be no justification for these payments to continue beyond 2021 when you consider that there has been the writing on the wall now for a decade—that this sort of business model, in the end, especially where it was built around compulsory super, was going to come to an end. I very much commend this bill to the Senate. I think it's an appropriate bill as part of a package on advice.

One final thing, if I may, on advice: I think financial advice is very important. One thing that I know that we will all be conscious of is: we don't want to put good financial advice outside of the reach of the average income earner, and I think there is a natural pendulum shift that's had to occur because of the scale of the wrongdoing in that sector. But I know that the minister and the executive government will think very carefully about all the future steps that are taken beyond this bill, which is proportionate and appropriate, to ensure that people can actually get financial advice. That's because it is important that people engage and think about what their objectives are, and I do worry about the idea of compulsory super being this idea that it's going to solve all your problems—that set-and-forget mentality. We want people to get good advice; we don't want it to be conflicted. It's been too conflicted in the past and built upon the compulsory super system, which has, I think, a number of problems. I certainly commend this bill to the Senate as a very important part of our response to the royal commission.