Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Acting Assistant Treasurer, Senator Cormann. Senator, I refer you to your recent announcement regarding the Future of Financial Advice package. Is the minister aware that over 100,000 Australians have been victims of collapsed investment schemes such as Storm Financial and Timbercorp? Why is the minister winding back consumer protections, reintroducing kickbacks to financial planners and removing the opt-in that stops fees eating into savings and investments?

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

I thank Senator Dastyari for that question. What we are winding back is the unnecessary and costly red tape, which does not make any difference to consumer protections but just pushes up the cost of advice. On this side, we want people saving for their retirement, people managing their retirement and people who are managing financial risks and seizing opportunities throughout their life to have the advantage of high-quality advice that they can trust and that is also affordable.

The senator mentioned the so-called opt-in requirements, which force clients to re-sign contracts with their advisers on a regular basis. After the Storm Financial collapse and so on, we had a parliamentary inquiry into Australian financial products and services. Out of more than 400 submissions to that inquiry, how many do you think recommended that bit of additional red tape? One. And it was from the Industry SuperFunds network. The inquiry, chaired by Mr Ripoll, was so convinced of that particular recommendation that they refused to adopt it. The Ripoll inquiry did not recommend the introduction of opt-in—that additional bit of red tape. Guess what? Because Minister Shorten, who was the Minister for Financial Services and Superannuation at the time, was so close to his friends in the union movement, because he was so committed to doing the bidding of the union movement, what did he do? He put it into his laws.

The reason we are making improvements to the Future of Financial Advice laws is that Labor's changes went too far, egged on by union dominated industry funds, and we are making sure we get the balance right for consumers with important consumer protections, and we are making sure that access to high-quality advice remains affordable. (Time expired)

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. What does the minister say to Timbercorp victims like Naomi Halpern, who joins us in the gallery today, who have had their savings stolen and, in some cases, even lost their homes because of the actions of a handful of financial planners? Why is the minister removing consumer protections that safeguard against investment schemes like Timbercorp?

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

Firstly, I empathise with anyone and everyone that is the victim of somebody who provides bad advice. All of us together, whether that is as policymakers or as industry participants, need to continue to work to lift professional, ethical and educational standards across the financial advice industry. A lot of that work has been happening.

I suspect that the events to which Senator Dastyari refers happened during the period of the previous government. What I am saying is that none of the changes that we are proposing to financial advice laws will in any way reduce consumer protection arrangements that would prevent a more effective regulatory arrangement being put in place. We are keeping the requirement for advisers to act in the best interests of their clients and we are keeping the ban on conflicted remuneration. What we are getting rid of is Labor's additional and unnecessary red tape, which was pushed on them by union dominated industry funds.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Minister, why are the financial interests of a handful of dodgy financial advisers more important than protecting the savings of hardworking people like Naomi Halpern?

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

I completely reject the premise of that question. What we are focused on is the public interest. We are focused on making sure that consumers across Australia can have access to high-quality advice that they can trust and that is also affordable. As a result of the changes that Labor has introduced, the cost of advice has been going up and up and up. In Australia the cost of advice it is already comparatively high because we have got too much red tape in place. It is a matter of balance. It is a matter of making sure that we have got important consumer protection arrangements in place in a way that is appropriately efficient so that people across Australia saving for their retirement, managing their retirement and managing financial risks through life can have access to high-quality advice which is also affordable. Your changes put access to advice beyond the reach of too many Australians who actually need it.