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Thursday, 22 March 2012
Page: 4049

Mr SHORTEN (Maribyrnong—Minister for Financial Services and Superannuation and Minister for Employment and Workplace Relations) (17:15): I thank the member for Bradfield for his invitation. First things first: I have just listened to an unsubstantiated attack on the member for Lyne. I make it very clear that in relation to amendment ZA284—that is, opt-in or a code of conduct—the only reason this government has diverged from just demanding opt-in compulsorily, full stop, is because of the member for Lyne, because of the Financial Planning Association of Australia and because of the application. He has stood up for financial planners and he has made a cogent case.

Opposition members interjecting—

Mr SHORTEN: I actually wish that those opposite would sometimes sit down and engage in constructive discussion with us and stop leaving the heavy lifting of compromise, negotiation and conciliation to the cross-benchers. It is interesting—and I do reflect that I listened very carefully to what the shadow Treasurer had to say—that, of the other set of government amendments numbered (1) to (17), we are in agreement on the first 13, which is good. This does show that sometimes we can reach the same conclusion, which is positive.

In terms of some of the questions that were raised, I want to go to some of the bigger picture points and then perhaps address some of the more specific issues which were raised in order to be of assistance, because I thought there were some legitimate questions. Firstly, the FoFA opt-in arrangement does provide certainty. The system which triggers opt-in will commence on 1 July 2013. But advisers have a choice: opt-in or an industry code. The consumer will have the certainty that they will be protected by opt-in or an ASIC approved industry code. Indeed, I wish that perhaps earlier governments had stamped out some of the problems with commissions when they were in power, instead of leaving it to the current government to do it.

There was also a reference to best interest duty, exposing advisers and having no legal certainty. It is true that in the financial services industry some stakeholders want a tick-a-box approach to the provision of advice. I do not believe this is what the consumers want. I do not believe that this is what many financial planners want. Nor do I believe that it is consistent with government policy. A tick-a-box approach is not what will change the culture of financial planning. I have said time and time again that I believe the vast majority of financial planners do an excellent job, but anyone who says that there have not been problems in terms of financial services in this country in recent years must have their head in the sand and certainly have not met some of the victims of Storm, Opes Prime or indeed, more recently, Trio. Our amendments provide more certainty with the provision of scaled advice, including protection around the full fact find. This is not enough for some in the industry but, at some point, I believe that one has to stop quibbling about the words and just simply embrace change.

There is an argument being run that somehow improving confidence in the financial planning system will undermine the job security of thousands of people in the financial planning industry. Well, welcome to nine to 12 per cent superannuation. It is this government who has increased compulsory superannuation from nine to 12 per cent this week, and it will be implemented over the next seven years. We are enlarging the opportunity for the wealth management industry in this country. We are not shrinking it; we are enlarging it.

There were some specific questions raised by those opposite, which I might just go to in order to provide some persuasive clarity, which might indeed engage them in a road to Damascus conversion on some of the amendments. In terms of the ASIC exemption from the application of opt-in, we believe that consumers are provided with certainty, that a code obviates the need for opt-in. Some say that we should have just stuck with opt-in solely. We believe that the ASIC code will allow a choice for consumers and for planners.

In terms of why we believe that opt-in is important—and we could accept the propositions put by many in the financial planning industry and consumer groups—is that we believe that we should provide flexibility—

Mr Briggs interjecting—

The SPEAKER: The honourable member for Mayo will not interject from outside his seat.

Mr SHORTEN: We did listen to people in the industry. That is why we have tried to provide this alternative to opt-in. In terms of our consultation—and the issue of who had been consulted was raised—in the last year and a bit, we have met with all of the groups on a consistent basis, with individual companies and planners. I have also met with some of the victims of unfortunate financial planning operations. We believe that ASIC is the right organisation to work the code. (Extension of time granted) We believe that ASIC is capable of working through with the industry stakeholders and consumers to develop this code. We have committed to providing the resolution about the code before 1 July 2015. So we do believe that there is plenty of time for ASIC to do the work that is required. We believe that it is the industry who has to be consulted in developing that code. We believe that this will provide an enhancement to the provision of financial advice in this country.