Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

I rise to address the quite astonishing claims by Senator Cormann in this chamber that the groundswell of disgust with the dismantling of the consumer protections in FoFA is some sort of Labor conspiracy.

Senator Cormann has shifted his lines of attack in the past fortnight. He has pivoted from claiming to be reducing red tape to now claiming that the concerns of consumer advocates such as Choice, National Seniors and the Council on the Ageing are some sort of stitch-up by the labour movement. I can assure this chamber that the pensioners and everyday Australians rallying against Senator Cormann's changes do not have any vested interests—they do not stand to profit—and they do not represent a grand conspiracy against this government. Senator Cormann's allegations are absurd.

I want to take some time this afternoon to put the comments of a broad coalition of concerned consumers on the public record. You will notice a common theme in the comments. Each one is offered in the best interests of consumers. Take Michael O'Neill from National Seniors. In a June 20 media release, he states emphatically: 'The Abbott government has clearly put big business ahead of consumers'. He went on to reinforce that:

Australians should not be paying commissions for advice they do not receive; every investor should see full fee disclosures annually; and we all should know that the nice lady at the bank is being well-rewarded for that product she’s just encouraged us to buy.

I challenge Senator Cormann to stand up here today and to state for the Hansard record that National Seniors are acting as a front for the labour movement.

Alan Kirkland of Choice, Australia's leading consumer advocacy organisation, was equally blunt:

CHOICE is calling on federal politicians to oppose all legislation and regulation that will wind back essential protections for consumers seeking financial advice.

Mr Kirkland reminds senators that:

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.

Indeed it has been removed by these regulations. I challenge Senator Cormann to stand here today and state for the Hansard record that Choice is acting as a front for the union movement.

Ian Yates from the Council on the Ageing, known as COTA, put out a statement on 20 June with a headline that summed it up quite nicely: 'Wind-back of FoFA protections still threatens future of financial advice industry and older Australians' assets and income'. Indeed, to avoid the slurs we have heard from Senator Cormann, COTA went to great lengths to state:

To be very clear, COTA is not siding with any special interests in this debate and resents any such suggestion - we are acting on strong legal advice about the impact of these reforms and deep concern expressed by members, and we would oppose the FoFA changes whether proposed by the government or Labor …

COTA went on, calling out very clearly who wins and who loses from Senator Cormann's sweetheart deal with the big banks:

The Big Four Banks and their push-selling business model will be one of the major winners if the legislation is watered down at the cost of their customers being vulnerable to less than optimum financial outcomes.

Is Senator Cormann happy to come into this chamber today and say, just as he has been saying with everyone else, that COTA is somehow part of some grand conspiracy of the labour movement? Alan Kohler, one of the most respected financial journalists in the country, today said:

The system of financial advice is inherently and deliberately deceptive because the most effective sales environment is where the customer doesn’t realise he or she is being sold to. Banks use the term ‘adviser’ or ‘planner’ as a synonym for ‘salesperson’; clients think an adviser advises. It is, at heart, simply a matter of semantics.

The Coalition government is in on the caper. Finance Minister Mathias Cormann has made some changes to the proposed Freedom of Financial Advice (FoFA) amendments to clarify his undying opposition to sales commissions for advisers/planners, but there are still plenty of carve-outs that allow banks to reward them for selling.

Is Senator Cormann going to come into this chamber today and claim that Mr Kohler is acting as part of a grand conspiracy in the labour movement?

There is Simon Hoyle from Professional Planner Magazine, who last week talked about the absurdity of the 'trade off' underpinning the government's logic for dismantling FoFA. He said:

The interests of individuals are being traded off against “business”, against the enrichment of individual financial planners, and against bank shareholders. At some point someone has to stand up and say that the most important people in this saga are the people who own the money. Not financial planners. Not financial planning businesses. Not the banks. And not the banks’ shareholders.

I do not think anybody could be any clearer.

Criticism of Senator Cormann's actions does not stop with those acting on behalf of consumers, even though not a single consumer organisation in this country responsible for dealing with victims of a financial crisis has supported it. Professor Dimity Smith from the University of New South Wales Faculty of Law concluded in February:

There is a big gap between requiring an advisor to act in a client’s “best interests” and that the advice be merely “appropriate”.

Paul Latimer, an Associate Professor at Monash University, in his submissions to the Senate Economics References Committee, plainly stated:

The proposed amendments to weaken the best interests duty have been barely noticed by the public not aware of what might be at stake for standards of professional advice on their investments and their life savings.

Senator Cormann's slur against the good people of these organisations is as offensive as it is ridiculous. What does Senator Cormann think is going on here? That these comments are the result of some kind of sweetheart deal with the labour movement, the ACTU perhaps, and every other conspiracy? As I said before, they are ridiculous and offensive.

Make no mistake: there is only one side of this place that is acting on behalf of a handful of vested interests. These regulations are expressly and blatantly designed to enrich the bottom line of the big banks at the expense of the bank balances of ordinary consumers. This is the best deal the banks could ever have imagined, courtesy of a government that will do anything to placate their mates, no matter who loses along the way. It is doubly offensive that Senator Cormann has decided to introduce these changes just a week after a devastating Senate report into the scandalous behaviour of Commonwealth Bank financial advisors.

The regulatory changes introduced by Senator Cormann will see the return of many of the practices that we on this side of the chamber—and at one point both sides of the chamber—tried to end. It is little wonder there is a queue a mile long of regular concerned citizens, pensioners, consumer advocates, financial journalists and law professors calling on the government to abandon these changes.

The people in this chamber have a responsibility to those who do not have voices for themselves—not the big banks, not the big financial planners, not the handful of people who are eagerly awaiting a return to the good old days of financial planning, where they could clip the ticket on the way through. We have greater responsibility than that. It is unfortunate and sad that Senator Cormann has decided to make this some kind of debate about a Labor conspiracy. There is no Labor conspiracy. You have CHOICE, you have the Council on the Ageing and you have National Seniors. Every consumer organisation in this country is opposed to these changes. I call on all senators to do the right thing by their constituents, disallow the government's changes and make sure that the voices of those who cannot be heard are heard. (Time expired)