David Fawcett SA, Liberal Party
3:00 pm
) ( ): Is the Assistant Treasurer aware of incorrect claims that the government's Future of Financial Advice reforms wind back consumer protections? Can the Assistant Treasurer advise—
Unidentified interjection - Hansard doesn't record who said this
Opposition Senators:
Opposition senators interjecting—
John Hogg President
Order! On my left! Senator Cameron! Senator Fawcett is entitled to be heard in silence.
David Fawcett SA, Liberal Party
Can the Assistant Treasurer advise the Senate of the government's response to these false allegations?
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
3:01 pm
I can inform the honourable member and the Senate that there have been a number of incorrect claims in this regard. We are not winding back the consumer protection provisions under FOFA.
Unidentified interjection - Hansard doesn't record who said this
Opposition Senators:
Opposition senators interjecting—
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
No, we are not. Our reform package of amendments is designed to reduce red tape and regulatory—
Opposition senators interjecting—
John Hogg President
Senator Sinodinos, resume your seat. I remind honourable senators that in another three or four minutes they will have the chance to debate this. It is disorderly to interject while the minister is answering the question. The minister is entitled to be heard in silence.
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
We are retaining the essential elements of FOFA. What we are doing is removing some unnecessary red tape and regulatory burden. What we are doing is clarifying the operation of FOFA and more effectively aligning the legislation with what was envisaged in the original parliamentary report.
Opposition senators interjecting—
These clarifications were set out in the dissenting report issued by coalition senators to that PJC report. All of the essential consumer protections will remain. Many of them are enshrined not just in the FOFA legislation but also in the Corporations Law and in the common law.
David Fawcett SA, Liberal Party
3:03 pm
Mr President, I ask a supplementary question. Can the Assistant Treasurer advise the Senate why the government is planning to amend the general 'best interest' rule in the legislation and how this will affect the quality and accessibility of financial advice in Australia?
Unidentified interjection - Hansard doesn't record who said this
Honourable Senators:
Honourable senators interjecting—
John Hogg President
When there is silence we will proceed. Senator Cormann and Senator Cameron, come to order! Senator Conroy! Senator Sinodinos has the call.
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
3:04 pm
In relation to the 'best interest' duty: those opposite should understand that what was put into the legislation was seven steps that financial advisers were being guided to act upon if they were to act in the best interests of clients. The reason that was done is that financial advisers were seeking clear guidance on how to perform those functions. In other words, it was made a safe harbour to give them guidance. It was not put in as further protection for consumers. What happened is that the seventh part of the protection that was put in was a catch-all that effectively undermined the guidance that was provided by the first six steps on how a financial adviser would meet the 'best interest' test. On top of that, nothing has been altered, requiring that advice be appropriate to the client—
Unidentified interjection - Hansard doesn't record who said this
Honourable Senators:
Honourable senators interjecting—
John Hogg President
Order! There are interjections on both sides. It is disorderly. Senator Sinodinos is entitled to be heard in silence.
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
There are a number of other duties the adviser must adhere to, including that the advice be appropriate for the client— (Time expired)
David Fawcett SA, Liberal Party
3:05 pm
Mr President, I ask a further supplementary question. Can the Assistant Treasurer advise the Senate how the proposed reforms to the Future of Financial Advice will cut red tape and compliance costs to businesses—
Unidentified interjection - Hansard doesn't record who said this
Opposition Senators:
Opposition senators interjecting—
David Fawcett SA, Liberal Party
and in turn deliver savings to customers?
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
3:06 pm
The previous government's FOFA reforms involved regulatory over-reach. Our reforms will save industry an estimated $90 million—
Unidentified interjection - Hansard doesn't record who said this
Opposition Senators:
Opposition senators interjecting—
John Hogg President
On my left: I realise it is Thursday afternoon and that some people are getting excited, but Senator Sinodinos is entitled to be heard in silence.
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
Our reforms will save industry and therefore consumers an estimated $90 million in implementation costs and will reduce the annual compliance burden by—
Opposition senators interjecting—
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
There will be annual compliance savings of around $190 million a year. The reason for that is that we will be removing excessive requirements, like an opt-in requirement where you have to opt in every two years, when at any time—
Opposition senators interjecting—
John Hogg President
Senator Sinodinos, resume your seat. When there is silence on my left, we will proceed. It is disorderly, and it is not helping the conduct of question time.
Arthur Sinodinos NSW, Liberal Party, Assistant Treasurer
We will remove the annual fee disclosure requirements for pre 1 July 2013 clients because we were told the costs of going back to reconstruct that sort of material would make it potentially prohibitive; the cost would be too high. Furthermore, your government—the previous government— (Time expired)
Eric Abetz Tasmania, Liberal Party, Minister for Employment
Mr President, it is with deep regret that I ask that further questions be placed on the Notice Paper.