Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the Senate take further note of the answers given by the Minister for Finance (Senator Cormann) to questions without notice asked by Senators Dastyari and Bishop today relating to the regulation of financial services.

There is a cunning plan going on on that side of the chamber. You can obviously see it. The trend of the week has been all about Western Australia because we happen to have a Western Australian Senate election. Mr Deputy President, I have to raise your attention to this: I do not see one Western Australian senator. There is one from Tassie, one from the ACT, one from Victoria—no, there is not one Western Australian senator who had the guts to stay in here and have the discussion. I want to go to the questions to Senator Cormann, but I cannot allow Senator Fawcett to escape with that ridiculous lead-in he gave me about how many doctors are employed somewhere in a GP superclinic in South Australia. We have a hospital in Perth—for all you West Aussies out there—called the Fiona Stanley Hospital. It is a well-known, brand-new, magnificent facility announced by—

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy President, I rise on a point of order going to relevance. Senator Sterle moved to take note of Senator Cormann's answers, which I believe were in relation to FoFA. I would ask that you direct him to be relevant.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Thank you, Senator Seselja. I draw Senator Sterle's attention to the motion that he has moved. We have always allowed a little bit of latitude in the debate, but not that much latitude.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy President, it has to be known that there are so many mistruths coming from that side of the chamber. None of you have got the guts to stand here and talk about FoFA, but I will talk about FoFA. What a pathetic effort to defend this one.

I want to read some interesting comments about the FoFA changes and the backflip from that side—the two-faced attitude from certain ministers. I go to today's Australian Financial Review. I quote Chanticleer, who said:

Sinodinos bungled the financial advice reforms by putting too much emphasis on cutting red tape and too little on what it would mean for consumers.

I go to another interesting comment in today's media from none other than Phillip Coorey, a very highly regarded journalist with the Australian Financial Review. He said:

It is too early to describe the FoFA freeze as a backdown but it could end up that way. Finance Minister Mathias Cormann says he intends to legislate for the policy as promised before the election, just that it would be better to have all the interest groups in agreement first—

Der! He continues:

Cormann, who designed the FoFA changes in opposition, is hardly signalling a rousing endorsement of stood-aside assistant treasurer Arthur Sinodinos.

You are pathetic, you lot.

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

Mr Deputy President, I rise on a point of order. I am wondering how Hansard records 'der'.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

There is no point of order. I am sure Hansard can cope.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I am quoting. I am quoting Phillip Coorey. I just want to remind that lot over there: allegedly, it is Minister Cormann who designed the FoFA. It is Minister Cormann who stood here today and said he is new to the issue and so he could not answer the questions. Someone is not telling the full truth. I want to finish the quote for that lot over there. I quote Mr Coorey, who said:

By Cormann's own admission, the stakeholders are largely opposed to what the government is proposing—

There is another 'der'! He continues:

He believes this to be more the product of misunderstanding and sloppy—

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

Mr Deputy President, I rise on a point of order. It is just unclear to me whether the senator is quoting Mr Coorey when he says 'der' or if 'der' is his own contribution to the debate.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

There is no point of order.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy President. I am so glad of your protection. I am shaking in my boots from that fierce attack. I just want to finish with this. Phillip Coorey said:

He believes this to be more the product of misunderstanding and sloppy reporting than anything the government has done.

Here is a cracker. I would be very interested to hear the response from some of those over there. This is another quote from the Australian Financial Review today. Sally Patten reports:

Commonwealth Bank of Australia revealed in September last year that it had stopped putting in place systems that would have enabled its advisers to sign fresh contracts with clients every two years, a measure Senator Cormann has been keen to drop. The government may also come under pressure to either obtain industry consensus …

Well, well, well. Let's go to one more thing. I really would love 20 minutes on this, but I know I do not have 20 minutes, which is sad. I was wondering: why would this government do a massive backflip?

Senator Edwards interjecting—

Is it because there is an election in WA? I reckon that has a heck of a lot to do with it. I will tell you another thing. Listen to this, Big Ears. Sorry, I take that back, Mr Deputy President. That is unparliamentary but it is the nicest thing I could think of looking at Senator Edwards. On the AEC website there is a $20,000 donation to the Liberal Party from the Financial Services Council, and who heads up that? None other than Mr John Brogden, a former Liberal Premier. The Financial Services Council represents Australia's retail and wholesale funds. Well, well, well. The minister said he is new; the minister said he knew nothing about it. He was up to his neck in it, in my humble opinion. He knew all about that. This is all about saying to donors to the Liberal Party, 'Wait until the Western Australian election. We'll look after it once that's come and gone.' (Time expired)

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Senator Sterle, I am sure you would be happy that your motion has the words 'further take note of the answers of Senator Cormann'. That is how the motion will be recorded.

Mehmet Tillem (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I rise to take note of Senator Cormann's responses to Senator Dastyari and Senator Bishop's question on the proposed FoFA legislation. When delivering his second reading speech on the former government's FoFA legislation in 2012, Senator Cormann said: 'In pursuing regulatory change the parliament must focus on making things better.' We on this side of the house are committed to making things better for the consumer, but those opposite are hell-bent on making things better for the bankers. I am told that there are several bankers on the benches on the other side—but bankers also are entitled to have a say, especially the merchant variety. The backflip and the decision to put FoFA on the backburner is underpinned by the fact that, when it comes to the proposed legislation, it is only the bankers who support it. Everyone else—whether it is the super funds, the consumer groups or the economists—supports the existing FoFA legislation that was enacted by the former government.

The desire by those on the other side to move to opt-in requirements for financial advisers has been defended under the ruse of reducing red tape. That argument is nonsense. It is clearly not that difficult for advisers to obtain written consent from their clients every two years to permit further charging of fees for ongoing services. The measure is designed to prevent the rorting of unwitting customers at the hands of exploitative Jordan Belfort types within the financial services industry. Without this legislation financial advisers who are so inclined could potentially continue to charge fees to clients without them ever knowing it. This provision ensures that there is a necessary added layer of disclosure between advisers and their clients, a vital measure for making an often esoteric industry less opaque to ordinary people seeking often complicated financial advice.

In the government's outline of proposed changes to the FoFA legislation they argue that requiring advisers to provide annual fee disclosure statements to their clients existing before 1 July 2013 is overly burdensome. What this means is that, if the Liberals get their way, clients who already had ongoing arrangements with financial advisers prior to 1 July 2013 will no longer be afforded the same level of protection as new customers. To discriminate between the two is patently absurd. It is a completely arbitrary policy decision that discriminates between clients of financial advisers for no reason other than to assist the feathering of the nests of the Liberals' mates in the financial services industry.

Related to this are the coalition's proposed changes to grandfathering arrangements in the industry which will permit advisers to move between licensees and still retain their existing grandfathering arrangements. In other words, advisers who move firms will remain exempt from many of the provisions introduced by the former Labor government. This is perhaps the most concerning of all the coalition's policies in that it will negate by stealth a range of provisions in place to protect consumers from self-serving and potentially harmful financial advice. What is the point of having these FoFA protections in place if the Liberal Party are determined to make them so easy to circumvent? The Liberal Party have decided to make extensive changes to conflicted remuneration provisions, and the best-interest duty should be the guiding principle for all financial advisers. Under the proposals by Senator Sinodinos, who is now dealing with his own bottom-of-the-harbour problems—no pun intended—Minister Cormann is now responsible for the best-interest proposal that will no longer apply to one-off advice—

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

Mr Deputy President, on a point of order: it is not appropriate to reflect on a senator. I am certain that Senator Tillem did not intend to do so. He may withdraw.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Senator Tillem has withdrawn. Senator Tillem, you have the call.

Mehmet Tillem (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

The best-interest proposal will no longer apply to one-off advice between financial advisers and their clients. This will mean unscrupulous financial advisers can now make their one-off dodgy sales pitch to a client and sign them up to an investment that is certainly not in their best interests. (Time expired)

Question agreed to.