Thursday, 25 September 2014
Questions without Notice: Take Note of Answers
Answers to Questions
I rise to speak in this debate on the motion to take note of answers, in particular on Senator Cormann's answer to the question from Senator Dastyari in relation to the FoFA reforms. It is an area that I have come to lately, but, having now apprised myself of it, I am extraordinarily taken aback by the hoax that Senator Cormann is perpetrating on this industry.
Labor's FOFA reforms were introduced in the wake of the collapse of Storm Financial and others and the subsequent parliamentary inquiry into financial advice products. These were the most significant reforms in financial services in a generation and included measures designed to protect investors and help the industry to professionalise. They included things like the best-interests duty—requiring advisers to act in their clients' best interests. One would have thought that, logically, that would have been at the heart of any advice being given by financial planners. To require that to be legislated speaks volumes about financial planners—or, at least, an element of financial planners. The reforms also required advisers to get their clients to opt in to receiving ongoing service every two years, which was about ensuring that people would recognise that they were paying for a service. There was annual disclosure: statements were to be sent to clients annually, disclosing fees and detailing services to be performed—quite frankly, a no-brainer, but something that this industry had lacked. There was the provision on conflicted remuneration—an extraordinary provision. You would have thought that that already would have been at the heart of financial planners, but in this instance Labor had to take this stance of banning conflicted remuneration—for example, things like commissions paid on financial products provided to financial advisers. The whole basis of the FoFA reforms was to restore faith in a sector rocked by high-profile collapses, and an extraordinarily poor culture exhibited by a few rotten eggs in financial planning.
The other side have decided to junk all of this. They have junked it in a way as a milksop to that rotten core of financial advisers. They have looked at how they can ameliorate and wind back that financial planning legislation. They have also done it in an extraordinary way. You would have thought they would bring a bill before parliament and have it properly tested. But they did it by way of a huge hoax. They brought it in by regulation and then said: 'At some point in the future, we will bring a bill and the regulations will only be interim. We need it quickly. Thanks very much.' An extraordinary circumstance. In my years in parliament, I do not recall where a government have said: 'We'll legislate by regulation. We'll repeal the regulation and then bring forward a bill later.' They have done that, but it contains wind-backs of strong, necessary financial services legislation. But it did not stop there. They were caught out as well.
The Standing Committee on Regulations and Ordinances belled the cat on them. It came forward very recently and said this idea of bringing out a reg just does not stand up to scrutiny—and it did not stand up to their scrutiny. The committee said they wanted a bit more advice from the minister, and let's see what that will be. In addition, it is not clear to the committee which regulation-making powers are being relied on. There is even some doubt about how the regulations have been made. They want specific provisions to be made.
They also noted that the minister refers to legal advice obtained by the Australian Government Solicitor. On past occasions, the committee has sought and been provided with the legal advice. By the look of that, they do not think the regulations stack up and are made under the act. By the look of that, the committee therefore requests from the minister a copy of the legal advice obtained in relation to this matter. What a hoax that they have perpetrated. (Time expired)
Question agreed to.