Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Hansard source

One is French; one's antecedents are from another area of Europe. There is always rivalry there, Senator Conroy! That inquiry made a number of very important recommendations. I will come to those in a moment, but I want to highlight, to go back to the previous point I made, that it makes particular reference to the Trio collapse, which raised distinct and—as the committee executive summary notes—in some ways more troubling issues than those raised as a consequence of the Storm and Westpoint collapses. Trio in itself involved fraud. As I have indicated, nearly 6,000 Australians, many of whom are in the Illawarra, invested in Trio and suffered as a consequence of that.

The Ripoll inquiry made 14 recommendations. Certainly the coalition supports those recommendations. If you look at some of those—and I will not delve into many of them—one of those recommendations goes to encouraging greater partnerships between regulators and experts in the private sector. It recommends that the Australian Taxation Office include clear, understandable, large-print warnings on its website that self-managed superannuation funds trustees are not covered in the event of theft and fraud and make sure that greater warnings are there. Those recommendations set out a whole range of other things in relation to compliance plans, regulatory arrangements relating to custodians, roles of ASIC, funding, involvement of the Australian Federal Police and cooperation with ASIC and APRA to pursue criminal investigations—and, as I said, a range of different matters which that committee dealt with very, very comprehensively. As the coalition senators indicated, the centrepiece of the Ripoll inquiry report was the recommendation to introduce a fiduciary duty for financial advisers requiring them to place their clients' interests ahead of their own.

The report's recommendations, as coalition senators have indicated, provide a blueprint that the government could have adopted in a bipartisan way to make important improvements to the regulatory framework of our financial services, and that certainly has been a position that the coalition has wanted and has advocated. Instead of implementing very sensible and widely supported recommendations—or those recommendations of the Ripoll inquiry—regrettably, the government, as coalition senators indicated, allowed its Future of Financial Advice reform package to be 'hijacked by vested interests, creating more than two years of unnecessary regulatory uncertainty and upheaval in our financial services industry'.

The concern is that the government's decision to make the processes around FoFA in the past two years leaves, to say the least, much to be desired. There were constant—and, as coalition senators indicated, at times completely unexpected—changes to the proposed regulatory arrangements under FoFA, which did very little to properly appreciate or assess the costs involved and of course any unintended consequences or other implications, which have now led to this legislation.

The important reforms that were recommended by the Ripoll inquiry have been delayed for more than two years while the government pressed ahead with a number of additional measures, contentious as they have been, such as the costly Industry Super Network initiated proposal that would force Australians to re-sign contracts with their financial advisers to a timetable imposed by the government and not chosen by consumers—the so-called 'opt-in' proposal.

In the time available to me, I will make some general observations. Financial services are a very important sector. Financial services help us all to make better decisions, but it is very important that, in ensuring that financial advice is available to the broader community—and, as I have indicated, most especially to older Australians, who are increasingly finding it difficult to manage their financial pressures, particularly with the increasing cost-of-living pressures—as we have indicated, there is always room for improvement.

Let me go to some of the specifics of this legislation and some concerns and criticisms that the coalition have. Firstly, the bills do not meet the government's own standards. In pursuing any regulatory changes it is important that the government must itself rigorously assess, as I have said, increasing costs and red tape for both business and consumers. And it is incumbent on the government to conduct a proper regulatory impact assessment to a standard which is at least consistent with its own practice regulation requirements. According to the government's own Office of Best Practice Regulation, the government did not have adequate information before it to assess the impact of the FoFA package on business and consumers or to assess the costs/benefits of the proposed changes. Of course, this is highly unsatisfactory, given the complexity of this legislation and the costs associated with these bills, particularly the more contentious parts of the proposed changes.

There is also an unrealistic implementation time frame. The current time frame of 1 July 2012 is completely unrealistic, given the proposed commencement date being imminent. As I have indicated earlier, and other speakers have indicated, it would have made sense to have implemented this package at the same time as MySuper was implemented.

Also, there are components of this package which require significant changes to the same financial service provider IT systems. It is in many ways symptomatic of the chaotic approach that this government has adopted in this area, as we have seen in so many other areas. And it is that lack of practical business understanding—understanding the practicalities of business realities, in that it is seeking to impose two different implementation dates involving significant and very expensive changes in relatively quick succession. For this reason, the coalition believes that these bills, if amended, should not commence until 1 July next year.

Another contentious issue is the opt-in provisions. They impose a mandatory requirement on consumers to re-sign contracts with their financial advisers on a regular basis. This will mean a significant increase in red tape and costs, not just for the planners but most importantly for the consumers. It would certainly put us right up there leading the world in terms of financial services red tape. Opt-in, most importantly, was not one of the recommendations of the Ripoll inquiry. In this context it is very important to remember that Industry Super Network provided the only submission to the original Ripoll inquiry arguing in favour of opt-in—so one really questions why this opt-in provision has been pushed.

In conclusion, as I said, the coalition will not be supporting these bills— (Time expired)