Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Having worked in the financial services industry and having been part of this inquiry, I say that it is a very complex area. I see the FoFA laws that were implemented is that as trying to simplify a very complex area, although some say they had overreach or overkill. During the inquiry we were told that if financial planners, for example, were to exhaust the list of things they needed to do to act in their client's best interests, that list could potentially be 30 or 35 checklists long. That is why the catch-all provision was put in, as it has been for other professional industries: to make sure that everything had been exhausted. But it was not to go into the legislation because that would have been very complex. When it comes to scaled advice, even the experts disagree as to where it kicks in and where it does not. We still have problems with defining 'personal advice' and 'general advice'. All these complexities are the reason we needed a simple set of laws that achieved a balance in protecting consumers in this country.

Senator Bushby said the impact went too far and it tipped the balance. It was designed to increase confidence in the financial planning and financial services industry. It was designed to get more people to go to financial planners, and that is a good thing. I met a lot of really good financial planners during this inquiry, and I must say that a lot of the smaller financial planners who charge a fee for service do a great job and that they have amazing relationships with their clients. That is not the issue for the Greens. The issue is the large vertically integrated financial services companies that we know have a conflict of interest inherent in their business models. The Australian Bankers' Association said on the record during the inquiry that they wanted these FoFA laws changed before 1 July so that they did not have to put in place costly compliance mechanisms in their back offices. To me, the real issue here is the opportunity costs of their lost income; the big financial services companies make so much money out of cross-selling products to their client bases. It is that lost income that is the elephant in the FoFA room. Why have the Bankers' Association and the financial services associations, representing the big end of town, lobbied so hard for these changes before some of them are even implemented?

I think the Greens have taken an eminently sensible approach to this inquiry by saying that, in areas such as opt-in clauses or best-interest duty or scaled advice, we should give it some time to see whether there is an increased cost for provision of financial advice—whether there are problems with increased insurance premiums, et cetera. We have not had time to see this through yet; all we have is speculation. Choice, Seniors Australia, with 200,000 members, and Certified Practising Accountants, one of the biggest lobby groups in financial services, did not want to see these laws weakened. These are very important stakeholders in this country who want to give these laws a fair go—it is not just the Greens or Labor.

Only now are we seeing the wash up of the GFC—whether it was the collapse of Storm Financial or whether it was the CBA in the media or whether it was Timbercorp, as we have seen this week—our toxic debt from the GFC is now washing through the economy. This is not the time to be weakening financial advice laws. We need to keep them strong and we need to send a very clear message to not only a few bad apples but also the big end of town that it is a cultural issue that we have to tackle through strong regulation.