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

I table a supplementary explanatory memorandum relating to government amendments to be moved to this bill.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

One of the amendments to the bill is said to be minor and technical but I want an explanation from the minister as to why the time for fee recipients to provide renewal opt-in notices to retail clients is extended from 30 days after the client's renewal notice day to 60 days. Why was that time frame doubled as an amendment in this bill?

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

It is because, in the judgement of the government and this is a position that is supported, I believe, by the opposition in a bipartisan fashion, that is a more appropriate and practically more realistic timetable.

While I am on my feet, I have already flagged in my second reading speech that the government intends to move a series of technical amendments, and Senator Whish-Wilson has already started to debate those amendments, so I seek leave to move together all of the amendments, from one to 29 on sheet GU108.

Leave granted.

On behalf of the government I move:

(1) Clause 1, page 1 (lines 15 and 16), omit "Corporations Amendment (Streamlining of Future of Financial Advice) Act 2014", substitute "Corporations Amendment (Financial Advice Measures) Act 2015".

(2) Schedule 1, items 1A to 1J, page 3 (line 4) to page 6 (line 23), to be opposed.

(3) Schedule 1, items 3 to 5, page 7 (lines 1 to 6), to be opposed.

(4) Schedule 1, item 6, page 7 (lines 7 and 8), to be opposed.

(5) Schedule 1, items 7 to 11, page 7 (lines 9 to 21), to be opposed.

(6) Schedule 1, item 12, page 8 (line 13), omit "paragraphs (2)(b), (ba) and (c)", substitute "paragraphs (2)(a), (b) and (c)".

(7) Schedule 1, item 12, page 8 (line 19), omit "paragraphs (2)(b), (ba) and (c)", substitute "paragraphs (2)(a), (b) and (c)".

(8) Schedule 1, items 13 and 14, page 8 (lines 20 to 33), to be opposed.

(9) Schedule 1, item 15, page 9 (lines 3 to 6), to be opposed.

(10) Schedule 1, items 17 to 20, page 9 (line 25) to page 10 (line 5), to be opposed.

(11) Schedule 1, items 21 and 22, page 10 (lines 10 to 13), omit the items, substitute:

21 Subsection 962K(1)

  Omit "30 days", substitute "60 days".

22 Subsection 962S(1)

  Omit "within a period of 30 days", substitute "before the end of a period of 60 days".

(12) Schedule 1, items 24 to 27, page 10 (line 19) to page 11 (line 2), to be opposed.

(13) Schedule 1, item 28, page 11 (lines 5 to 8), omit the example.

(14) Schedule 1, item 29, page 11 (line 20) to page 13 (line 29), omit the item, substitute:

29 At the end of section 963B (after the note)

  Add:

(4) The regulations may prescribe circumstances in which, despite a provision of this section, all or part of a benefit is to be treated as conflicted remuneration.

Note: The expression intrafund advice is often used to describe financial product advice given by a trustee (or an employee of, or another person acting under arrangement with, the trustee) of a regulated superannuation fundto its members, where that advice is not of a kind to which the prohibition in section 99F of the Superannuation Industry (Supervision) Act 1993 applies. (Section 99F of that Act prohibits trustees of regulated superannuation funds from passing on the cost of providing certain kinds of financial product advice in relation to one member of the fund to another.)

(15) Schedule 1, items 30, 31 and 32, page 13 (line 30) to page 14 (line 2), to be opposed.

(16) Schedule 1, item 34, page 14 (lines 7 to 18), omit the item, substitute:

34 Section 963C

  Before "Despite", insert "(1)".

34A At the end of section 963C

  Add:

(2) The regulations may prescribe circumstances in which, despite subsection (1), all or part of a benefit is to be treated as conflicted remuneration.

(17) Schedule 1, item 35, page 15 (line 10), omit "personal advice", substitute "financial product advice".

(18) Schedule 1, item 35, page 15 (lines 15 to 24), omit subsections 963D(3) and (4), substitute:

(3) The regulations may prescribe circumstances in which, despite subsection (2), all or part of a benefit is to be treated as conflicted remuneration.

(19) Schedule 1, items 36, 37 and 38, page 15 (line 25) to page 17 (line 12), to be opposed.

(20) Schedule 1, items 39 and 40, page 17 (lines 13 to 16), to be opposed.

(21) Schedule 1, item 43, page 18 (lines 1 to 3), omit "Corporations Amendment (Streamlining of Future of Financial Advice) Act 2014", substitute "Corporations Amendment (Financial Advice Measures) Act 2015".

(22) Schedule 1, item 43, page 18 (lines 7 and 8), omit "Corporations Amendment (Streamlining of Future of Financial Advice) Act 2014", substitute "Corporations Amendment (Financial Advice Measures) Act 2015".

(23) Schedule 1, item 43, page 18 (lines 9 to 23), section 1531AA to be opposed.

(24) Schedule 1, item 43, page 18 (lines 25 to 27), omit "The amendments made by items 7 to 16 of Schedule 1 to the Corporations Amendment (Streamlining of Future of Financial Advice) Act 2014", substitute "The amendments made by items 12, 14A and 16 of Schedule 1 to the Corporations Amendment (Financial Advice Measures) Act 2015".

(25) Schedule 1, item 43, page 19 (lines 2 to 4), omit "The amendments made by items 17 to 21 and items 39 and 40 of Schedule 1 to the Corporations Amendment (Streamlining of Future of Financial Advice) Act 2014 apply", substitute "The amendment made by item 21 of Schedule 1 to the Corporations Amendment (Financial Advice Measures) Act 2015 applies".

(26) Schedule 1, item 43, page 19 (line 11), omit "for pre-existing clients".

(27) Schedule 1, item 43, page 19 (lines 12 to 14), omit "The amendment made by item 22 of Schedule 1 to the Corporations Amendment (Streamlining of Future of Financial Advice) Act 2014 applies", substitute "The amendments made by items 20A, 20B and 22 of Schedule 1 to the Corporations Amendment (Financial Advice Measures) Act 2015 apply".

(28) Schedule 1, item 43, page 19 (lines 19 and 20), omit "Corporations Amendment (Streamlining of Future of Financial Advice) Act 2014", substitute "Corporations Amendment (Financial Advice Measures) Act 2015".

(29) Schedule 1, item 43, page 19 (lines 24 to 30), section 1531F to be opposed.

These are agreed refinements aimed at improving the operations of FoFA and alleviating a number of unintended consequences that have arisen since the FoFA laws were legislated.

Senator Dastyari and Senator Whish-Wilson would well know that this piece of legislation, the broader FoFA regulatory arrangements, have a long history, particularly in the Senate. Both senators have been in much of that, along the way. As a result of the disallowance of a previous set of FoFA related regulations some further regulations were made, on a bipartisan basis, to deal with some of the necessary improvements, which have bipartisan support.

This bill now enshrines these things as appropriate into legislation. These amendments remove measures in the 2014 bill that do not have broader parliamentary support. These amendments include an extension of the time frame for advisers to send renewal opt-in notices to retail clients and fee-disclosure statements to pre-1 July 2013 clients from 30 to 60 days. The bill already extends the time frame for financial advisers to deliver fee-disclosure statements to their post-1 July 2013 clients. The amendments bring the time frames for providing these documents in line with each other.

During consultation, a number of stakeholders supported the extension of the time frames for fee recipients to provide their statements. I noted that the 30-day time frame was not long enough to properly prepare and quality-assure these documents, particularly as information is usually needed to be sourced from third parties. The extension of the time frame will also be beneficial for consumers in ensuring they receive documentation that contains accurate information.

The amendments also amend the short title of the act—to the bill, at the moment, which hopefully will become the act, to the Corporations Amendment (Financial Advice) Measures Bill 2015. This change is reflective of the fact that the proposed amendments have substantially changed. They are, primarily, minor and technical in nature. The government is committed to ensuring that FoFA operates efficiently and effectively for all consumers and industry participants and, as I indicated in my summing-up speech, we particularly thank Dr Jim Chalmers for his assistance in progressing these bipartisan refinements to FoFA in an efficient manner. With these few words, I commend these amendments to the committee.

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

I just want to confirm that this correlates with my understanding that the amendments being proposed are only the amendments that were discussed in correspondence between the Hon. Kelly O'Dwyer and Dr Jim Chalmers. I have a letter in front of me that you may or may not have, referring to a letter on the 13th, saying that the government intends to table parliamentary amendments to the Senate in the week beginning 23 November and that they reflect the bipartisan agreement reached and there is nothing in these amendments outside of that. That is my understanding. I would like to get your confirmation.

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

Yes and no. Senator Dastyari asked me two questions. Yes, this reflects the agreement and no, there is nothing else in there.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Senator Cormann, you talked about alleviating a number of unintended consequences that have arisen since the original laws were legislated. Could you go into some more detail about what those unintended consequences are?

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

Thank you, Senator Whish-Wilson. As you would be well aware, we have had hours of debate about all the ins and outs of the future of financial advice changes, which had their iteration right from the outset—from the previous government's efforts to implement recommendations from a bipartisan inquiry, locally referred to as the Ripoll inquiry, through the Joint Committee on Corporations and Financial Services.

With reforms of this size and complexity, there are always unintended consequences. Various parliamentary committees have scrutinised this in some great detail. The amendments here in front of us are amendments that have broad consensus across, at least, the two major parties as being sensible technical improvements to the framework that is currently in place and will continue to be in place. As such, unless Senator Whish-Wilson has a specific question he wants me to address, I do not propose to go back through the whole comprehensive debate that we have been having for a number of years on these matters. In fact, that debate started all the way back in 2009. I am always happy to answer specific questions but that is really a question that invites me to go through the whole history, again.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You are absolutely right, Minister, I do remember the long and lengthy debates and conversations we had, in here, around this. The unintended consequences we talked about related to things I cannot see in this bill. In fact, they may relate to things around catch-all phrases and best-interest duties, which have been removed from this bill and which I am quite glad about. I was just wondering if there was anything more specific that you could point to, in relation to the unintended consequences, in your statement.

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

Unless you have a specific inquiry, there were many unintended consequences. I will give you one example. It relates to the way FoFA treats basic insurance products and non-cash payments. Essentially what we are proposing to do here is ensure that FoFA treats basic insurance products and non-cash payments consistently with other simple and well-understood financial products. There was an unintended consequence that the application of the previous FoFA regime went too far, and that is now widely accepted.

It also clarifies the intrafund advice provision to ensure it operates as originally intended and not in the broader way, essentially to avoid unintended consequences here too. It makes clear that the client pays exemption; it also applies in circumstances where benefit is paid by another party, as long as the payment is made out of the client's funds and the benefit is given at the direction of the client and with the client's clear consent.

So this is essentially a tidy-up bill, which I would have thought was pretty uncontentious.

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the following amendments be agreed to: (1), (6) and (7), (11), (13) and (14), (16) to (18), (21) and (22), and (24) to (28) on sheet GU108.

Question agreed to.

The TEMPORARY CHAIRMAN: The next question to be considered is that items 1A to 1J, 3 to 11, 13 to 15, 17 to 20, 24 to 27, 30 to 32, 36 to 40, and sections 1531AA and 1531F in item 43 of Schedule 1 stand as printed.

Question negatived.

The TEMPORARY CHAIRMAN: Are there any other amendments to consider? As there appear to be none, the question now is that the bill, as amended, be agreed to. Senator Whish-Wilson?

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Just before you move on, let me get on record that there very well may have been amendments that the Australian Greens would have put up to this, including the extension of 30 days to 60 days for opt-in. we did hear a lot of evidence during the inquiry that 30 days was sufficient time. Most financial planners and most financial advisers, have good databases; the information systems where their clients would well and truly have advance notice of the requirement for an opt-in and that still gives them a month to do follow-up work on those clients. So that is an example of something we very well might have put an amendment up for. But let me get on record here today that we have not had time to consider amendments. We have not had time to even consider the amendments in front of us and we are very disappointed that we have not had the opportunity to do our job in the Senate, which is to scrutinise this and actually see if we can improve the legislation.

Bill, as amended, agreed to.

Bill reported with amendments; report adopted.