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

I rise to address the Senate on the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020. I start this contribution by reflecting upon where this fits into the Liberal tradition and the Liberal philosophy in Australia. We have always taken the view that we will pursue law reform, whether it be to address wrongdoing in capital or wrongdoing in a trade union. That has been our tradition. There is no doubt that it took too long to have this royal commission. Once it was up and running, it did show that there was enormous malfeasance going on in the financial sector. It is to the credit of people who pushed for that particular commission that we now have significant reforms already enacted by this parliament with more to come today.

We've already delivered quite a large number of the recommendations. By the time this bill is passed, 70 per cent of the recommended changes will be the law of Australia. The Hayne commission was a broad based review, so there are many component parts. A couple of them, which have already been enacted and which I think are quite important, include: putting your best-interest duty in for mortgage brokers; ending the gravy train of conflicted remuneration; ensuring that there is a requirement for compulsory membership for AFCA; stopping hawking; and also putting in place laws which end the trail of money between super trustees and their clients, which is known as the hostplus clause. There's been this enormous gravy train washing around in the financial adviser sector and the super sector, where all the snouts have been in the trough for far too long. These changes put an end to that. They must ensure that the financial sector is focused on the people that they serve: their clients, their customers and the workers. I think we have a particular duty to reflect upon the laws in this area very carefully as a parliament, because of the existence of this quite extraordinary experiment of compulsory superannuation, which takes away people's money and gives it to strangers to manage—usually poorly. We must make sure that the workers' money is well looked after and is not being pillaged by banks and unions.

This particular bill deals with financial advice, and its three main components are to put in place opt-in arrangements so that clients have to agree on an annual basis to fees. That is entirely reasonable. It has been the subject of much consternation over the years, but I think asking people to agree for ongoing fees makes a lot of sense. It also takes us into the territory of requiring a disclosure of independence. I would say that too few Australians access good-quality advice and I think that good-quality financial advice can actually help all Australians. But it is important that Australians can have confidence that the advice that they are receiving is in their interests and not in the interests of some other financial fizgig. That is what the disclosure requirements in this bill will require, so people will know whether or not their financial planner, their financial adviser, is conflicted in the advice that they provide. With this statement of independence, basically, a planner will no longer be able to hold themselves up as independent if they are not. This bill will define how that is to occur: the financial planner must provide the client with a statement of their independence as part of the financial services guide.

There is no doubt the financial services guides are already too long. But I think if we're going to add one more piece of paper then adding an assurance of independence is important. It is true that there has been great malfeasance in this sector, and that is to be greatly regretted. But it is a sector which is important to our economy and it's too important to let it go and allow it to go the dogs. So measures like these that are designed to bolster independence, credibility and standards are absolutely worthwhile, which is why the commissioner recommended them.

The third component of this bill puts in place arrangements in relation to MySuper accounts, which are the default super accounts, so that ongoing advice fees cannot be deducted from MySuper accounts. But the provisions will permit one-off or discretionary fees to be taken from MySuper accounts at the direction of the individual client. There can be no more of the ongoing gravy train with fees for no service that roll on for ever and ever. The only fees that will be permitted to be taken out of people's default superannuation accounts will be at their discretion and on an individual basis. That is what this bill will do. Those are effectively the three key changes which add to what is already a very good suite of reforms.

As I said, we have already delivered 70 per cent of the royal commission's recommendations, so when the Labor Party come into this chamber and say that we're dragging our feet, it's just not true. Seventy per cent within two years is a significant achievement, given the breadth and scale of this royal commission. It's also not true that we are avoiding Hayne's recommendation in relation to responsible lending. All these contributions from people who say that we're stripping away responsible lending are skin deep. Responsible lending is embedded in the prudential standards and laws of Australia and will be for all time. When an individual goes to seek a loan from a financial institution, whether it be an ADI bank or a non-ADI institution, that institution will have to assess their capacity to repay that loan. For low-income people, there will be additional protections. Unfortunately, other than to run these glib talking points, the Labor Party don't seem to be able to muster more than a skin-deep, superficial economic policy and financial policy. Responsible lending is embedded in the legal framework and the fabric of Australia and it will be after our responsible lending reforms pass this parliament.

Finally, these are all incremental changes. All of these changes from the royal commission will ultimately build confidence and improve standards in the financial sector. But it's just one set of reforms. The other reforms we need to continue pursuing include getting workers a better deal in their super, which is why structural changes were announced in the budget to further end the gravy train. This huge experiment of superannuation has sat there for 30 years, with its own book being run for its own interests, not considering the interests of the workers, on whose money it is being run.