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

First, the question is wrong. The government is not removing the requirement for an adviser to act in the best interests of their client. I refer Senator Tillem to subsection 961B(1), which includes the explicit requirement that an adviser must act in the best interests of their client. That remains unchanged—we are not touching it; we are not amending it. The senator then refers to a catch-all provision, which does not relate to the requirement to act in the best interests of the client—it is part of a safe harbour provision Labor added to the Corporations Act which a financial adviser may want to rely on to prove that they have acted in the best interests of their client. There are six specific steps in that test, as well as a final, as the senator described it, catch-all provision that an adviser should take all other reasonable steps beyond the six very comprehensive steps.

That only goes to the test as to whether an adviser has acted in the best interests of their client; it does not go to the requirement to act in the best interests of their client. As the senator will be aware, the Senate inquiry asked lots of questions in relation to this very technical aspect of the Corporations Act, and when questions were asked, including of the biggest critics of our proposed changes to financial advice laws, as to what other reasonable step a financial adviser should be required to take in order to prove they have acted in the best interests of their client, nobody was able to propose such a reasonable step to us. That is why we say the six specific steps that are in the safe harbour provision, introduced into the Corporations Act by Labor, are sufficient, as a safe harbour provision, but none of that takes away in any way, shape or form the requirement for financial advisers to act in the best interests of their client.

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

No, that is not true. As Senator Tillem suggested in his question, the only reason Labor imposed that bit of red tape into the legislation was that the industry super funds movement wanted it. The Ripoll inquiry, which investigated the collapse of Storm Financial, did not recommend it, and out of the more than 400 submissions only one submission asked for it, and that was the submission from Industry Super. Of course Mr Shorten, who was the minister at the time, cannot have been very confident that the cost-benefit equation of that bit of red tape stacked up, because he refused to comply with his own government's requirements when it came to regulatory impact assessments. Minister Wong was supposed to be the guardian, through the Office of Best Practice Regulation, of ensuring that ministers across government go through proper processes to assess that the cost-benefit equation stacks up. Bill Shorten did not do it because he knew he was just imposing additional costs without additional benefits.

John Hogg (President) Share this | Link to this | Hansard source

Just ask the question.

John Hogg (President) Share this | Link to this | Hansard source

Order! When there is silence on my left.

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

That is not what the government is doing. Unlike the Labor Party, which was acting to pursue the vested commercial interests of one particular segment in the financial services market, we are actually focused on the public interest. We are focused on making sure that people across Australia who are saving for their retirement and are wanting to manage their retirement can have access to high-quality advice that they can trust and which is also affordable. You are just trying to help your union mates who are desperately keen to get themselves into a better competitive position in the financial services market.