Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I rise to speak on the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016. Since the member for Higgins is in the chamber, it would be remiss of me if I did not move a second reading amendment, so I move the following second reading amendment as circulated in my name:

That all the words after "that" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes that in recent years, numerous cases of inappropriate financial advice have had a negative impact on Australian consumers' confidence in the financial services industry;

(2) notes that this lack of trust has become a barrier to consumers seeking financial advice;

(3) welcomes this continuation of the Future of Financial Advice reforms which were initiated under the former Labor government; and

(4) calls on current Liberal and National Party parliamentarians to apologise for the disregard their colleagues in the 43rd parliament showed for the many victims of bad practice in the financial advice sector when they voted against Labor's Future of Financial Advice measures.

Those of us on this side of the House sit in the proud history of reforms to protect consumers. It was a Labor government that introduced the Trade Practices Act in 1974, National Competition Policy in 1995, the Superannuation Guarantee in 1992 and the Future of Financial Advice reforms under the previous Labor government.

Labor recognises that regulation has to help the most vulnerable, not simply assist the most powerful. We remember the losses incurred by Australian families. As a result of the Storm Financial collapse, many lost their entire life savings. With Trio, many lost their homes. There have been financial scandals where Australians have not only lost everything but also ended up in debt.

In this context, it is critical to remember that there are many good financial planners in Australia who work hard in the best interests of their clients. For those financial planners, it is absolutely critical that the best standards of the industry are upheld. When someone goes to a person who calls themselves a financial adviser or a financial planner, they should be confident that they are going to an expert who can provide them with quality financial advice. This bill will restrict the use of those titles.

The Corporations Act imposes a general obligation on licensees to ensure their financial advisers are adequately trained and competent, and the Australian Securities and Investments Commission has issued guidance on the minimum training standards. But concerns have been raised that the current standards of ASIC's guidance are not commensurate with the level required to ensure appropriate technical and professional competence. As peak consumer group Choice put it, the requirement that financial planners have more qualifications was a 'no-brainer change'. Choice was quoted in the Financial Review last year as saying:

It had been apparent from a number of investigations that some advisers had very low education standards.

In some instances, ASIC's existing minimum education and training standards have not been applied consistently across the industry. The rigour and the quality of some training courses are questionable. The standards as they presently exist do not specify the duration or standard of training that advisers must undertake, and there are reports that some advisers purport to satisfy the requirements yet have only completed a few hours of studies.

In December 2014, the Parliamentary Joint Committee on Corporations and Financial Services reported on proposals to lift the standards. The committee considered the interim report of the Financial System Inquiry, which had noted significant issues with the quality of financial advice due, in part, to varying standards of adviser competence. The Financial System Inquiry highlighted consumer outcomes as a critical area for reform, and the committee's report noted that the issues relating to the competence of financial advisers remained unresolved. The parliamentary joint committee and Financial System Inquiry reports highlighted five main deficiencies in the current education and training requirements: that the current education and training requirements in the Corporations Act are low; that the standards are vague; that the standards are not holistic; that the stakeholders have raised concerns that the training requirements do not keep pace with changing market conditions; and that there is no central database with information about the quality of various education and training courses.

Currently, financial advisers are not required to adopt or comply with an overarching ethical code. This bill addresses some of these concerns, providing new education and training standards; transitional arrangements that apply to existing advisers; a new requirement that relevant providers comply with a code of ethics; an obligation on an Australian financial services licensee to ensure that its relevant providers comply with the new education standards and are covered by the compliance scheme; restrictions on the terms 'financial adviser' and 'financial planner' so they can only be used by persons who are relevant providers; amendments to the content requirements for the register of relevant providers; appropriate sanctions; and a new standards body.

We welcome the belated action from the government to improve the professional standards for financial advisers. But I am old enough to remember being in this place when we had to fight tooth and nail to stop the Abbott-Turnbull government from watering down Labor's Future of Financial Advice reforms, which had been praised by ASIC and which had opt-in requirements and fee disclosure statements, which this government claimed were red tape and too expensive for the big banks to pay for. Labor stood up against the government's attempts to water down the Future of Financial Advice reforms. We were pleased, as Australians were pleased, when the government finally dropped their wrongheaded attempt to scrap consumer protections in the form of the Future of Financial Advice reforms. They were great Labor reforms, opposed by the Abbott and Turnbull governments and stood up for by the Labor opposition. Thanks to our opposition, they continue to exist.

Indeed, the attempted scrapping of the Future of Financial Advice reforms says it all about the government's red tape repeal strategy. The original red tape repeal day not only attempted to get rid of the FoFA consumer protections but also attempted to get rid of the charities commission. I am delighted to inform the House that the Australian Charities and Not-for-profits Commission now enjoys bipartisan support. The Abbott-Turnbull government, after fighting tooth and nail to scrap the charities commission, has finally seen the light. It was a pleasure today to join Minister McCormack at a function here in the house with the Australian Charities and Not-for-profits Commission, presenting research to an ACT charities group, at which Minister McCormack reflected the government's new-found commitment to the charities commission—a body which can do genuine red tape reduction, as we are seeing now through the ACT, South Australia, Tasmania and, probably soon, Victoria; removing redundant red tape which affects charities. That is real red tape reduction. But the government's attempt to take away the FoFA protection was anything but and would indeed have thrown Australian consumers of financial advice into a world of pain.

We are going to continue to argue for a royal commission into the banks, because, while we are supporting this bill today, we do not believe that the government's attempts to make sure that egregious wrongdoing in the financial advice sector have been strong enough. Only a royal commission can get to the bottom of the culture and practices that have let misconduct in the financial sector continue to grow. We have seen some of those opposite, including the member for Dawson, say that they support a royal commission into the banks. And, on the last sitting day of last year, we saw this House come within one vote of supporting a royal commission into the banks. That shows you how strongly the Australian community feel about this. I am not one much for surveys, but I could not go by one survey which said that not only Labor voters but also coalition voters supported a royal commission into the banks. It is a measure which is past due. Only a royal commission will allow victims to be heard and identify the systematic changes that will ensure that we have strong banks going forward.

Labor supports this bill, but we believe that the government could go further. It is not good enough for them to back down on their attempts to scrap FoFA. It is not good enough for them to put in place these measures, sensible as they are. They need to support a royal commission, as Australians across the political spectrum are calling for.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

I second the amendment.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

The original question was that the bill now be read a second time. To this the honourable member for Fenner has moved an amendment that all the words after 'that' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that amendment be agreed to. The question is now that the amendment be agreed to.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is always a pleasure to rise in the House to speak about the terrific work that this government is doing to improve the standards and efficacy of advice in the financial advice services industry in this country, but I take issue with a couple of comments that the member for Fenner made. He was focused on advisers in a bank setting. There are far more advisers in Australia than those employed by the banks. There are many independent, professional financial advisers in this country who want to see the standards of their industry improved and developed for the future to ensure that the advice that is provided to the Australian public is in their best interests. It is of no interest to these small business owners around the country to provide poor, negligent advice or poor ongoing service to their clients, because then they do not have a business. Many of these people actively support the provisions outlined in the Corporations Amendment (Professional Standards of Financial Advisers) Bill, in terms of improving education standards, and many of those people are already at the forefront of pursuing high educational standards in the industry. So it is with great pleasure that I stand here and speak on this bill today, because I know that the people that I speak to in the industry on a regular basis support this bill and support the amendments we have made over time through listening to what the industry has said to us.

I, like anybody else in this place, acknowledge that there have been problems in the financial planning sector in years past, but many of the reputable organisations have sought to weed out those advisers who were doing the wrong thing. The dealer groups who had advisers in their ranks who were doing the wrong thing should fully be held to account, because Australians deserve to know that when they go to see a financial adviser they are going to get professional, unbiased advice that is in their best interests. What this government, in the previous term and in this term, is focused on is ensuring that advisers provide advice to Australians that is in their best interests, because we already know that many Australians are underinsured, and insurance is a key component for people's financial arrangements. We know that as people build larger and larger superannuation balances they are going to need advice along the way, in particular when they are close to their retirement years, to make sure that their financial affairs are in order for when they want to retire. So it is critically important that we ensure that the network of financial advisers—both those employed by the banks and those who run their own businesses as small business owners around Australia in small country towns and in suburban locations around our major cities—are capable of providing that professional advice to their clients.

This bill seeks to introduce a number of new measures which will require relevant providers to hold a degree, pass regular exams and complete a professional year, just like solicitors, accountants and lawyers do when they finish their degrees. They cannot immediately go and practise. They have a professional year, or maybe a couple of years, where they are under the supervision of somebody who has the experience and the qualifications, not just qualifications from a degree but practical, day-to-day experience providing advice to their clients. So these new entrants to the industry will come in with a degree and a professional year and be taught by somebody who has developed a reputation and the knowledge from day-to-day practice. They will also undertake ongoing, continuing professional development. This is enshrining in law something that already happens for professional financial advisers. I know that when I was an adviser we had a minimum of 30 or 40 continuing professional development points that we had to achieve every year through a variety of subjects. If you read any of the industry literature—a financial planning magazine or an AFA magazine—most have continuing professional development components in them to allow practitioners to ensure that they are meeting their current ongoing professional development requirements.

The bill will also ensure compliance with a uniform code of ethics. As I said at the outset, over the past 10 or so years there have been repeated instances of inappropriate financial advice which, quite rightly, have decreased consumer confidence in the financial advice industry. Not all of these circumstances are actually the responsibility of an adviser. There have been many instances over the past 10 years that relate to product failure that the adviser has borne the brunt of. I think that this is something that still needs to be addressed in the structure of our regulation, but this lack of trust and confidence has led to poor outcomes for both consumers and the industry, with consumers often reluctant to seek financial advice, and, as I have said, it is becoming more and more necessary.

The latest figures show only one in every five Australians now seeks financial advice, yet at a time when the financial circumstances for many people are becoming more complex. Raising the professional standards of financial advisers seeks to play a significant role in improving consumer trust in the financial advice industry. As a result of that I hope that what we see are significantly improved outcomes in the financial wellbeing of Australians.

The government has consulted widely on the measures in this bill, which build on the model proposed by the Parliamentary Joint Committee on Corporations and Financial Services, and the recommendations of the financial services inquiry. When investigating underlying causes of the failings and lack of consumer confidence in the industry, concerns were raised for both of these avenues—over the existing education and training requirements for financial advisers—by not only the financial advice industry but also by consumer groups, the government, the parliament, ASIC and the parliamentary joint committee. In its report, it provided proposals to lift the professional, ethical and education standards of the industry. The reforms in this bill seek to commence a journey of delivering on those improvements for consumers by raising education standards to a degree level or equivalent.

Both the financial services inquiry and the PJC reviews identified that existing professional standards for advisers were too low and did not ensure all financial advisers have the necessary skills to provide high-quality advice to consumers. And there have been a number of reports subsequent to that which have outlined some of those issues, particularly if we look back at the recent changes to remuneration for life insurance advisers based on an ASIC report into some of the issues in that industry.

These reviews recognised the current regulatory framework was not enough to build a broad base of professionalism in the financial advice industry, even though—as I said earlier—there are a number of very successful professional financial planning firms and advisers in the financial services industry already. With this bill it is hoped that we see an encouragement to the industry to itself take the steps to lift its standards. The reviews also found the current framework lacked incentives needed to encourage the industry to go above and beyond.

There is widespread support for these changes across industry, consumer groups and the parliament—for the standards to be maintained among practising advisers through continuous learning. To implement these changes, the government will establish a standards body which will set the education standards, exams, a professional year and continuing professional development required, as well as develop a code of ethics. The standards body is expected to consult broadly with the industry and other stakeholders in developing these standards to ensure that concerns raised by stakeholders are addressed and that the standards meet the expectation of consumers and the industry. Importantly, a substantial time frame is being given for advisers to work towards meeting the minimum standards. The new standards body is expected to be established by mid-2017 but, importantly, the changes for advisers do not commence until 1 January 2019. The expectation is that all advisers in the industry will meet the new education standards by 1 January 2024.

Under these changes, financial advisers will require a degree, while existing advisers will need to meet a standard equivalent to a degree set by the new standards body. While the detail will ultimately be set by the new standards body, it is important to note that not all existing advisers will have to return to university and complete a three-year degree program. Some may not, but a majority are likely to receive a credit for the education or training they have already completed and will need only to gap-fill or undertake bridging courses to meet the minimum standards required by 1 January 2024.

These reforms represent a necessary and valuable change to the current regulatory environment for financial advisers. This bill upholds the government's commitment to raising professional standards in the financial advice industry and forms part of a broader reform plan to more effectively align the interests of the financial advice industry with good consumer outcomes.

This bill shows that we are actively taking the reforms necessary to deal with the issues that have been experienced by consumers in the financial services sector around Australia. But that is not to say that there are not a good many professional financial advisers out there today working day in and day out for the best interests of their clients. They are providing professional advice on an initial and ongoing basis. But everybody in the industry recognises the importance and the need to make these changes and to lift the standards. I commend the bill in its original form to the House.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I thank the honourable member for his contribution and acknowledge his contribution to the financial sector before coming to this place—a worthy contribution.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise this evening to speak on the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016. This bill makes amendments to the Corporations Act to raise the education, training and ethical standards of financial advisers by requiring relevant providers to hold a degree or a higher or equivalent qualification, to pass an exam, to undertake a professional year, to undertake continuous professional development and to comply with the code.

The reason for this legislation is that, in recent years, numerous cases of inappropriate financial advice have been shown to have a negative impact on consumers' confidence in the financial services industry. This lack of trust is said to have become a barrier to consumers seeking legal advice. The financial services industry, consumer groups, the government and the Australian Securities and Investments Commission have raised concerns with the existing education and training requirements for financial advisers.

The bill includes the following amendments to the Corporations Act: new education and training standards that must be met by individuals who provide personal advice on relevant financial products to retail clients; transitional arrangements that apply to existing advisers; a new requirement that relevant providers comply with a code of ethics; an obligation on an Australian financial services licensee to ensure that its relevant providers comply with the new education standards and are covered by a compliance scheme; a restriction on the titles 'financial adviser' and 'financial planner' so that they can only be used by persons who are relevant providers; amendments to the content requirements for the register of relevant providers; the provision of appropriate sanctions where a relevant provider or licensee fails to comply with the new obligations; recognition of a new standards body which will set out the details of the new education standards and develop the code; specialist knowledge about the specific products an adviser provides advice on, and the markets in which they operate; and generic knowledge requirements, including training on the economic environment, the operation of financial markets and financial products.

Having said that, it is very important for members of the public who take financial advice to realise that financial advisers do not always get it right. One of the books I read over the holiday break was titled The Tyranny of Experts. It listed the many times throughout history when so-called experts have got it exactly wrong. Just look at some examples from our recent history. Back in February 2008 the price of oil hit US$140. Oil is a finite resource, the demand from China and India was growing and growing; surely the price of oil would continue to increase? That is what all the expert financial advisers said. But from US$140 in February 2008 oil hit a low of $29 in January 2016. How many experts predicted that?

Last year we saw the price of coal stuck around the $50 mark. All the experts told us, 'Coal is on the way out.' There was an abundant supply of coal on the market, therefore nothing would happen. But in the second six months of last year we saw the price of coal increase 100 per cent. Yet again, hardly a single financial expert picked it.

Then we have currency fluctuations. I can tell you, Mr Deputy Speaker, from over 25 years of watching how the Australian dollar moves against the US dollar and what all the experts predict, that the best advice I can give to anyone is: do exactly the opposite of what the experts tell you when it comes to currency forecasts.

And then we had the recent Trump rally. All the experts told us that if Donald Trump were successful in the US presidential election it would be disastrous for the world economy, yet we have seen a Trump rally—an almost 10 per cent increase in US stock prices, almost $2 trillion extra created. Again, it is the complete opposite of what the experts told us.

Brexit was meant to be a disaster for the British economy. We were told by the experts that if Britain decided to leave the EU it would be disastrous for the economy. Yet an article in The Australian on 6 January this year said:

Britain ended last year as the strongest of the world's advanced economies with growth accelerating in the six months after the Brexit vote …

Business activity hit a 17-month high …

…   …   …   

Andrew Haldane, chief economist at the Bank of England, suggested that economic forecasters were facing a 'Michael Fish moment' over their mistaken predictions, referring to the BBC weather forecaster. Mr Haldane, comparing the profession's failure to spot the 2008 recession to Mr Fish's infamous assurance of 'no hurricane' on the eve of the great storm of 1987, said: 'It's a fair cop to say that the profession—

that is, financial advisers—

is to some degree in crisis.

He also admitted to shortcomings in pre-Brexit predictions, saying that 'the data has surprised to the upside.'

…   …   …   

An assessment by Cambridge University criticised 'flawed and partisan' Treasury forecasts of Britain's economy outside the EU.

I am glad that the member for Port Adelaide is at the table, because I know he has been one who has been listening to the experts who tell us, 'If we get all this renewable energy, electricity prices will go down.' We have seen—history has shown us—what a complete and utter nonsense that is, and nowhere more than in the member for Port Adelaide's home state of South Australia.

If financial advisers are looking at expert advice, there are a few other good examples from history. I have given you some recent examples, Mr Deputy Speaker. I would like to go back to a few historical examples of how the experts have got it wrong. A prediction from the President of the Michigan Savings Bank was: 'The horse is here to stay, but the automobile is a novelty and a fad.' Thank goodness people did not follow the predictions of that expert. HM Warner of Warner Brothers—who would be more expert in his industry?—in 1927 said, 'Who the hell wants to hear actors talk?'

Of course, there is the exact opposite. There are those who have not had the formal education but have had the streetwise sense to get their predictions right. In the time allowed, I would like to go through a few examples. Henry Ford, the founder of Ford Motor Company, was someone who had no real education and yet revolutionised the world with the Ford Motor Company. JD Rockefeller, the business magnate, left school at 16 years of age. Larry Ellison, the co-founder of Oracle—a self-made billionaire—dropped out of two colleges and never completed his degree. Ralph Lauren, that famous fashion designer, left college after two semesters and never attended a fashion school, and yet the Ralph Lauren name is synonymous with high fashion. Steve Jobs, the co-founder of Apple, only graduated from high school and dropped out of college. So did Steve Wozniak, the other co-founder of Apple. Richard Branson never completed high school and dropped out at the age of 16 years—not only that; he was said to be dyslexic and had poor academic performance. I could go on and on. We need to be very careful that we do not think that there is this 'expert opinion' that is always right, because our history tells us it is the opposite.

I would also like to make a few comments about what the member for Fenner said when he talked about the need for a royal commission into the banks. The member for Fenner said—and I think I have got the quote right—'Only a royal commission will allow victims to be heard.' That is absolute, complete and utter nonsense, and it shows that the member for Fenner does not understand the problem. The victims need either a tribunal or a one-stop shop or a commissioner that can hear their complaint. And it is not just about hearing their complaint; it is about getting compensation for these people—and that is exactly what we have seen. We have seen the Kate Carnell report recently released—and I congratulate the minister at the table, the Minister for Revenue and Financial Services, for commissioning that report. That report went and looked at some of these things. Something that a royal commission would take years and years to do, and would cost tens of billions of dollars, has already been done. The Kate Carnell report has found that in several cases there has been unconscionable conduct. What the people who are victims of that unconscionable conduct do not need—the very last thing that they need—is some longwinded royal commission that goes on for years and years. By the time that royal commission was finished, they would be time-barred for their cases under our Trade Practices Act, now called the Competition and Consumer Act. We need the procedures so those people can be heard and they can get their compensation done. If there is unconscionable conduct by the banks, we have the laws; we have the regulation. Let the cases be heard in the tribunal or the courts.

That is what this coalition is doing. We are not about grandstanding about a royal commission. We want to get compensation for those people who have been victims of unconscionable conduct by a bank. Those on the other side are only interested in complete grandstanding about a royal commission. It is a different thing. We on this side of the chamber are about getting the job done and about getting results. Those on the other side are just about grandstanding and being show ponies.

I say to those on the other side of the chamber: 'Forget your grandstanding. Forget politicking. Do what is right for this country, for this country's economy and for the businesses out there. If you want to get jobs created, if you want to get economic growth going, join with us in our enterprise tax plan. Let's get these tax cuts, this legislation for a reduction in the corporate tax rate, through the House and through the Senate as soon as we possibly can.' And then we may need to go again.

Kelly O'Dwyer (Higgins, Liberal Party, Minister for Revenue and Financial Services) Share this | Link to this | Hansard source

I would first like to congratulate those members who contributed to this debate—the member for Forde, particularly, and the member for Hughes. What an eloquent contribution you made to this debate. Your interest in this matter is well known. You have stood up for good financial advice throughout your career and it is great to see that you have been able to voice that here in the chamber this evening.

The Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 is intended to raise the professional, education and ethical standards of financial advisers. Over time, repeated instances of inappropriate advice have led to a reduction in consumers' trust in the financial advice industry. Reduced trust acts as a barrier to consumers seeking financial advice, which is a poor outcome for both consumers and the industry. I recognise that the majority of financial advisers have provided and continue to provide appropriate and high-quality advice to their clients. The measures debated today will help to rebuild confidence in the industry, which has been compromised due to the actions of a minority of advisers. Under the proposed legislation, financial advisers will be required to hold a degree or a qualification equivalent to a degree, complete a professional year, pass an exam, undertake continuous professional development and comply with a code of ethics. This is a momentous step forward. Under the new framework, financial advisers entering the industry for the first time will require a degree, while existing advisers will need to meet a standard equivalent to a degree. Existing advisers will not be required to return to undertake a bachelor's degree; they will be able to reach degree equivalent status by undertaking relevant bridging courses.

The new professional standards regime will commence on 1 January 2019. From this date, new advisers will be required to hold a relevant degree. This will ensure that, from the start of their careers, financial advisers are adhering to standards that are consistent with the provision of high-quality advice and in the best interests of consumers. Existing financial advisers will have access to transitional arrangements allowing them two years until 1 January 2021 to pass the exam and five years until 1 January 2024 to meet the education requirements. The transition period recognises that existing advisers may need to complete the education requirements on a part-time basis while continuing to service their existing clients. The government will establish an independent standards body as a Commonwealth company limited by guarantee to administer the new professional standards regime. It is anticipated that the new standards body will be established by mid-2017. From the date of the establishment until the regime commences on 1 January 2019, the body will be responsible for developing and setting the industry exam, developing the code of ethics and setting the education requirements. This is a tight but achievable time frame. The standards body will develop the exam, the code and the education and training standards in accordance with international best practice and will consult broadly with stakeholders throughout this process. All advisers, both new and existing, will be required to pass the exam and to undertake continuing professional development. The exam will test the practical and ethical knowledge of advisers and will represent a common benchmark across the whole industry. The exam requirement also lifts Australia's standards to a global level. The United States, Britain and Hong Kong, amongst others, require advisers to complete an exam before they are authorised to provide advice to clients.

A single uniform code of ethics will set the ethical principles that advisers will operate under. Professional associations and other independent third-party monitoring bodies will develop compliance schemes to monitor and enforce advisers' adherence to the code, and these compliance schemes will be approved by the Australian Securities and Investments Commission. The code will ensure that financial advisers are held to a high standard of ethics, with non-compliant advisers subject to disciplinary actions and sanctions. A key feature of the reforms for new advisers will be the requirement to complete a professional year under the supervision of an experienced financial adviser. Through this direct mentoring relationship, new advisers will be able to develop their technical knowledge and the soft skills critical to a client-facing role.

These proposed reforms follow important steps already taken by the government to improve the transparency and accountability of financial advisers. We have already established a register of financial advisers that allows consumers to verify advisers' credentials so as to be confident that the adviser is appropriately qualified and experienced. The proposed legislation will further enhance the register of financial advisers by allowing consumers to access additional relevant information about an adviser, such as where the adviser has been found to have breached the code of ethics and, if so, what disciplinary action has been taken in response to the breach. Consumers will also be able to search for financial advisers in their area by using a postcode or information about the financial adviser's principal place of business. This function is currently not available on the register.

The reforms respond to two significant reports: the Parliamentary Joint Committee on Corporations and Financial Services inquiry into proposals to lift the professional, ethical and education standards in the financial services industry; and the financial systems inquiry. Both reports were released in December 2014 and both recommended raising the professional, educational and ethical standards of financial advisers. These reforms have also been welcomed by the industry. Industry understands that these reforms are an important step towards the professionalisation of financial advice and will go a long way to building trust and confidence in the sector. The government will continue to consult with industry in developing the detail on these new standards so that the financial advisers have a say and a stake in the future of their profession. The educational requirements ensure that, in the years to come, financial advice will be considered, in the same vein as accounting or law, as a true profession.

Right now, we know that only one in five Australians seeks financial advice. This means that only one in five of us is receiving professional advice on setting financial goals, making the most of our savings and protecting our assets. The Turnbull government wants more Australians to have the confidence to seek financial advice, and that means making sure that people have access to financial advisers who will put their interests first and who are professionally competent and ethical. The bill will achieve this incredibly important objective for the benefit of all Australians and will play an instrumental role in renewing trust and confidence in financial advice. I commend this bill to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that the amendment be agreed to.

Original question agreed to.

Bill read a second time.