Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present the committee’s report, incorporating a supplementary comment, entitled Statutory oversight of the Australian Securities and Investments Commission, together with the evidence received by the committee.

Ordered that the report be made a parliamentary paper.

by leave—I would like to commend, as always, ASIC for making itself available to the committee. It had been through Senate estimates and then had to come under a grilling from the committee as well, so we are very appreciative of its time. I would also like to put on record my appreciation to the secretariat, which I failed to do when I presented the report into superannuation earlier this week. Our committee secretariat have been exceptionally busy. This is another fine report, and I thank them for all their hard work.

The statutory oversight hearing went through many issues predominantly to do with property investment scheme collapses, bank conduct and dispute resolution procedures, professional indemnity insurance for planners, ASIC’s review of the EFT code, superannuation advice, ASIC’s ‘shadow shopper’ survey and the ANAO report on ASIC’s investigation procedures. I will go into only a couple of these.

Predominantly, I want to talk about property investment scheme collapses. Since the report was written, we have seen yet another property investment scheme collapse. With the interest rate rise yesterday, this will have a greater bearing on the people who have invested their money in these schemes. The report says:

At the Senate estimates hearing on 30 May 2007, ASIC indicated that the $8 billion unlisted and unrated debenture market, representing 1.5 per cent of the total debt securities market, will be given additional attention. The Westpoint, Fincorp and ACR schemes are part of this sector. A three point plan was outlined by new ASIC Chairman, Mr Tony D’Aloisio:

1. Assess the business models of existing schemes.

2. Intervene with/guide proposed new schemes to add protection to business models and improve disclosure.

3. Improve investor education programs.

We need to know why people are being tempted into these very risky schemes that have been collapsing. Predominantly, these people are older and they are losing their entire retirement savings. The report continues:

ASIC indicated that ascertaining the reasons why these unsecured products have attracted investors is a priority:

... we are looking very closely at what was the investor profile, but more importantly we are also looking at what motivated the decision, what were the decision points; the extent and role advertising played; advice, where they sought the advice, where they did not; how they characterised an unlisted, unrated debenture, unsecured note compared to a term deposit; was there confusion.

I, like many in this place, have constituents who have been caught out by these schemes and have lost their entire life savings. We need to do more to protect people from themselves. We need to ensure that there is greater financial literacy out there. More and more people are coming into large sums of superannuation and they need to have sound advice on which to make decisions about where to put those moneys.

These schemes all seemed sound, but they have all collapsed. Labor has moved to include a supplementary comment in the last paragraph of the report. Given the very lengthy observations and concerns expressed about property entity collapses and the significant number of people hurt as a consequence, it is time for a full and thorough public inquiry into all aspects of the collapses, including ASIC’s performance. Senator Nick Sherry has written to the chairman of our committee seeking such an inquiry to ensure that people do not lose their money in these schemes in the future.

I also commend the recommendation in the report to ask ASIC to do a shadow-shopping exercise again on superannuation switching, before the end of 2007. The last time it conducted such an exercise it discovered many faults in the system. Once again, people need to be given appropriate, timely advice. They need to know what they are leaving and what they are going to, and that information should be in a format that they can understand. Greater financial literacy is needed throughout our community and we must ensure that people have that advice and information. The oversight of ASIC is a fairly dry and boring exercise, but we should all pay more attention to our superannuation and future. I commend the report to the House.