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Mr ROBB (Goldstein) (18:00): I rise to contribute to the debate on the Corporations Amendment (Future of Financial Advice) Bill 2011 and the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011. I start with a note of thanks. This is a highly complex area, highly important. So many thousands of people's lives are affected by this decision, not only those receiving advice, most importantly, but also those that are giving the advice.
A division having been called in the House of Representatives—
Sitting suspended from 18:01 to 18:21
Mr ROBB: As I was saying before we were rudely interrupted with a division, I would like to begin my comments with a vote of thanks in particular to John McInerney, who is a financial planning consultant from Bentley and has given me enormous assistance, with invaluable, informed advice and insights from the coalface. He organised some 60 fellow professionals within the financial planning profession locally to gather with our shadow minister, Mathias Cormann. We had a 2½ hour session on the impacts of the legislation on their services and on the way they interact with their clients. It was a most valuable exercise. John has been in the financial planning industry since 1988, and before that spent 23 years as an educator, so he is a person with the sorts of qualities to be very effective, as he has been in providing advice to clients. He has also been an active participant in raising the standards in the profession, as a member of FPA's Towards Professionalism Task Force, and has assisted the Securities Institute of Australia to develop its financial planning course amongst the profession.
I feel I had some very good guidance locally, meeting so many of them from the southern suburbs in Melbourne. It is certainly something that has greatly exercised the sector, and this legislation is very important. They are very proud of the profession that they are part of and the service that they give to individuals. I suspect that the one-on-one nature of the profession is something that elicits from so many of them a great desire to assist and ensure that the quality of life and the opportunities of their clients are maximised. You would expect that they are 'people people', and they are professionals who take great pleasure in seeing the success of others, because, if that happens, that means they have been successful. The coalition cannot support the future of financial advice bills in their current form. This is very unfortunate because, as we all know, a cross-party committee—the Ripoll committee—did some very solid work, coming up with a list of comprehensive, balanced recommendations that had the support of both sides of the House. Sadly the Minister for Employment and Workplace Relations, after several months of being influenced by other vested interests, has materially changed some recommendations and added other recommendations which we find unnecessary and in fact counterproductive and in particular serving the interests of one part of the industry—the industry funds. This reflects the continuing bias of the minister for workplace relations. I see him as the minister for unions in much of what he does. This is a very unfortunate development.
Sitting suspended from 18:26 to 18:39
Mr ROBB: As I was saying before the division, it is a bit ironic that after a day in the House when there were quite wild and ridiculous assertions being made of undue influence, here we have in this very bill tonight a concrete example in legislation. A very strong bipartisan position has been derailed by the decisions of the minister, who has been quite clearly and unduly influenced by former colleagues and cronies within the union movement. It really is an unfortunate state of affairs that we have here a piece of such significant reform legislation which has been so sadly derailed, one which was agreed on by those who are very experienced and well credentialled on both sides of the House on these issues. Their agreement had laid out a series of comprehensive and quite effective measures that would have been dealt with in a bipartisan way. If this legislation were to be amended along the lines put forward by the coalition, we could return to a position of bipartisanship, instead of a position that will quite clearly benefit a certain sector of this industry in a most unfortunate way and will impact dramatically on the lives, the profession and the businesses of many thousands of people who are so strongly experienced in this sector.
Unfortunately, the FOFA package of legislation in its current form is unnecessarily complex and in large part still quite unclear. It is expected to cause increased unemployment and it is legislating to enshrine what is really an unlevel playing field amongst advice providers while inappropriately favouring a government-friendly business model. It is likely to cost about $700 million to implement and a further $350 million per annum to comply with, according to conservative industry estimates. To go from a position where there was industry and bipartisan support for a range of measures to one with all of those faults is quite unacceptable. I can understand what has happened but, for the life of me, I do not know how the minister can stand there with a straight face and support the measures he has now made decisions on. In some cases, as I have said, they are decisions which are still unclear about how the measures would operate—and I am not sure that he knows either. As it currently stands, the legislation will lead to quite significantly increased costs and reduced choice for Australians seeking financial advice.
The coalition will be moving a series of amendments, the most important of which are that the government be required by parliament to table a regulatory impact statement on FOFA which has been assessed as compliant by the government's Office of Best Practice Regulation. The level of regulatory impact of this bill is just beyond the pale. In the last 3½ to four years we have seen the greatest growth of government in our lives, and that includes the Whitlam era. This place is now awash with legislation despite the hand-on-heart commitments given by former Prime Minister Rudd, when in opposition, about one regulation in and another one out. I think it is currently something like 16,000 pieces of regulation in and at most 200 or 300—and I think I am being generous—pieces of regulation out. We are awash with regulation and this bill will add another bucketful to the industry and massively increase costs. The opt-in arrangement should be removed from FOFA. It is something that was not part of the bipartisan agreement. The opt-in arrangement imposes a mandatory requirement on consumers to re-sign contracts with their financial advisers on a regular basis. Not only is this a significant increase in red tape and cost for both planners and consumers, it will make Australia the world champion in financial services red tape. It was not part of the initial Ripoll inquiry recommendations. In this context it is important to note that the Industry Super Network provided, not surprisingly, the only submission to the original Ripoll inquiry, arguing in favour of opt-in. The proposal for a mandatory opt-in requirement was not accepted by that very comprehensive inquiry.
The minister has been unable to point to another example anywhere in the world where the government has sought to impose a mandatory requirement on consumers to re-sign contracts with their financial advisers on a regular basis. On our side of the House we strongly oppose Labor's push to force people to re-sign contracts with their advisers on such a basis. If you know anything about the nature of the industry and what functions within some of these Industry Super Network organisations you can see that they will have a very clear advantage. This is what it is there for: to siphon customers away from small business people who have spent a lifetime developing relationship and expertise and giving independent advice. They will be siphoned off into industry funds because of these sorts of arrangements. The industry funds can absorb a lot of this complicated procedure and they have other benefits that the small independent players may not such as connections with different policies and all the rest those things that will come into play.
Again, all of that is within organisations—these industry funds—where there is no transparency about the directors who run the organisations and the salaries they get. These are the sorts of things that are commonplace within the corporate world. They are multibillion-dollar industries and organisations that are responsible for billions in funds. We have this extraordinary situation where they are able to pull the levers of influence and not have any transparency. We had a day in the House on transparency and here is another perfect example where there is no attempt for real application of it. Yet one of the major recommendations of the Cooper inquiry was to shed some light on the inner workings of the sector so that there is more competition. When there is competition you get self-regulation in many respects, because the consumer is able to make their own judgments and they will discipline organisations by taking their business to where they see they will get the best opportunity.
Amongst these amendments the coalition has moved—and for which we are looking for support—we also see proposals that the retrospective application of the additional annual fee disclosure requirement be removed; the drafting of the 'best interest' duty be improved; the ban of commissions on risk insurance inside super be further refined; and the implementation of FOFA be delayed until 1 July 2013, to align with MySuper. Minister Shorten and the crossbench members should seriously consider these amendments.
This industry provides important financial services and advice. It helps Australians with their financial health and wellbeing. Australians are becoming far more financially literate and far better able and prepared to seek advice and have an informed view themselves to balance up the advice they get from these advisers. The services are dealing with other people's money, which is why it is so important to have an appropriately robust regulatory framework in place. The framework worked satisfactorily through the global financial crisis. We think there is room for further improvement and that is why within the very comprehensive Ripoll committee inquiry we agreed to a raft of changes on a bipartisan basis with those on the other side of the House. Certain elements of it have been turned on their head for no good reason. There has been no justification. You just get an assertion from the minister that this is the way it is going to be, and you will cop it. Well, we are not going to cop it. If we do not get these amendments in place we are going to oppose these things so that we can protect the livelihoods of so many thousands of very strong and professional people— (Time expired)
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