Sharon Claydon (Newcastle, Australian Labor Party) Share this | Hansard source

I rise to join with my Labor colleagues, the member for Oxley, the member for Blair, the member for McEwen and the member for Kingsford Smith, on today's matter of public importance, namely, the government's failure to protect Australians seeking financial advice for their hard earned savings.

Across the globe and here in Australia, we have seen the massive damage that can be caused when financial service providers take advantage of their clients

I have listened carefully to arguments put by members opposite. No matter how they might like to dress this little package up, there is no mistake that the government's proposals are, indeed, those that were lobbied for by the big banks and the financial planners. The big banks and AMP together control some 70 per cent of the financial planning market in Australia. The government has lost sight of the very reason for Labor's future of financial advice, FoFA, reforms, which were introduced following a big series of financial collapses that occurred here and abroad and the subsequent parliamentary inquiry into financial advice products and services.

I think it is really worth reminding ourselves why those Labor reforms were introduced in the first place, because who could forget the devastation that emerged when Storm Financial collapsed? The lives of thousands of mostly elderly Australians were ruined. The reckless advice given by Storm cost more than 3,000 investors around $3 billion. I recall members opposite arguing: 'We're introducing these reforms, because it's just a small number of people that have been doing the wrong thing. That's why we can strip away consumer protections now, throw them to one side and give the financial planning market increased opportunities to do as it sees fit.' This would again expose a situation where you could have 3,000 investors like the mostly elderly Australians who were set to, and did, lose $3 billion.

As reported in the Monthly, Barry and Deanna Doyle from Townsville are one case in point. I note the member for Herbert sitting in the chamber. I am sure he will be very interested in this case. The Doyles double-geared into the stock market by borrowing against their home and using the cash to raise yet more money to invest. Barry worked as a part-time librarian, earning $17½ thousand per year. Deanna was retired and received about $7,000 per year from Centrelink. Yet, thanks to Storm, they ended up owning a share portfolio costing $2.26 million, with debts to match on which their annual interest payments eventually rose to $191,800. Two-and-a half years after first engaging Storm, the Doyle's super had gone, the share portfolio had been sold and they had racked up a debt of $456,000 on their home, with insufficient income to make the repayments. They had been wiped out, with Storm charging them more than $150,000 for the privilege.

The Labor reforms, which many of my colleagues have gone into in detail, were put in place to ensure the best possible protection for people like the Doyles and the many other mum-and-dad investors around Australia. Regrettably, under the process that the government has chosen to undertake, we are not even seeing these proposals from the government as legislation that can be debated in the House; they are sneaking it through the back door as regulations not legislation, and this means that we do not even get to have this discussion in parliament in the way that we should be.

In closing, I would like to echo the words of Alan Kirkland, the Chief Executive Officer of Choice, who said:

Conflicted and poor financial advice has cost consumers billions and in too many cases led to people losing their homes and life savings. This is why consumer protections were originally needed and exactly why they should not be removed.

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