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Wednesday, 21 March 2012
Page: 3906


Mr O'DOWD (Flynn) (17:07): The Corporations Amendment (Future of Financial Advice) Bill 2011, which is before us and is being debated cognately with the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011, has been considered in the short time we have had to go through the bill as it stands. Whilst the bill has some merit, it definitely does need not tinkering but major changes to it. In fact, we have come up with 16 amendments that we wish the government would consider. If they were to consider these amendments, we would have no hesitation in supporting the bill through the House.

In its current form it is an extension from 2001, where the government of the day—John Howard's government—provided a solid regulatory foundation for our financial services industry. Since then a lot of things have changed. We admit that changes need to be made and there is always room for improvement. If the coalition's amendments go through and are adopted into the bill it would be great for the people in the industry. In my seat of Flynn there are many financial advisers. There have been many financial advisers living with the communities in the business world that have been there as a normal part of doing business. A lot of people rely on financial services because they do not have time to go through all sorts of legislation and investment advice. When you have been out mustering cattle all day or out branding you might be away from the homestead for many days. The last thing you want to do is come back to your home to do paperwork. That is what country folk have had to base their business on over the years. They have had to become more and more astute with government policies and legislation. People in the financial services sector are there to help them, and a lot of financial advisers are very concerned about what is in store if we were to disrupt this type of business. The bill was first mooted over two years ago and only came to the House's attention in February this year. That does not give anyone too much time to scrutinise the bill, to go through it to see what changes have to be made.

As the member for Hughes has just said, software staff have to be trained. As you know, Madam Deputy Speaker Livermore, we are flat out getting staff in the Central Queensland area. It is very difficult for these businesses to get new staff and to train them on updates to software packages. We strongly suggest that the whole bill not come into force until 1 July 2013 along with the MySuper policy. It makes sense to us on this side of the House that the two acts commence on 1 July 2013, not 1 July 2012.

We need to set up hotlines to help these people through the changes. March has nearly gone and that does not leave much time for industry as a whole to make these vast changes to the regulations. Reform is going to be bogged down in red tape and it is also going to be costly. It is estimated that the cost will be $700 million in the first year of these changes and $350 million each year after that. You can see it is not going to be expense-free for the government or for industry. If we could spread it out over a little further time and adopt these 16 amendments it will serve everyone in Australia much better.

We do not want to see what happened in the Storm Financial disaster—there were some other companies involved in that too. The company was based in Townsville and people from Cairns, Townsville, Mackay, Rockhampton and Gladstone took the brunt of that loss. I know many people in Rockhampton and Gladstone who were hit and lost their life savings. It was a very bad thing. Nonetheless, it has happened and we are still going through why it happened and what can stop it from happening again. That is why this bill is important and it is important that we get it right.

We will probably have to face job losses if the financial companies have to wind back. While those people in our area can soon get another job it is different for other people around Australia. They might find it hard to get jobs in the financial world if the banks cut back their services, as they are. The banks are starting to lay off people. If financial advisers start to lay off their staff, there could be a crisis in that particular area of employment. As the member for Hughes has said, will it favour the big companies and not the little guys? Under this bill, we think there will be inequities and the smaller players will be bowled over and will have to leave the market, and that the big guys will be favoured. We think that will be a tragedy for our area. There are not too many with the big corporate companies in our area. The playing field will be uneven, and I would not like to lose the smaller players from the financial services sector.

It is good to pick up the phone and call someone you know in your home town and have a good yarn about what is happening in the financial world, what is happening in the share market, what to invest or what to divest and so on. It is day to day for these guys. But with large corporations you do not have the ability to pick up the phone and say: 'Hello, Tom. How are you going? What should I be doing? Should I be investing in gold? Should I be investing in silver, the metals or the share market, or just keep the money in the bank?'

The trouble is even if you do not have any wealth, you still need them. For young people it is difficult to get finance for housing. Once upon a time, if you had a good bank account or good cash flow, you could get a bank loan. Now there is a more serious approach and you need a good job and you need to be investing in a good business or a good asset. The banks will no longer take just one of those; they need both. They require a good cash plan and good assets to back up the loan. This is where the financial adviser comes in. A young person might even have a good education, but they still need financial advisers and providers to help them through the maze to get finance for their new home or small business. At the moment, small business is on the nose with the banks. I would like to see this changed. The help of financial providers can point young people in the right direction.

The implementation time frame is 1 July 2012 and there is inadequate information available. It has not gone through the House yet, so the financial advisers will not be left with much time to make some very important decisions for themselves, their businesses and the people whom they service. Who knows when this bill will go through. We do not sit for another five or six weeks and that takes us another month or so closer to 1 July, when this legislation will take effect. That is why we say that we want to put it back at least 12 months to 1 July 2013. We oppose the opt-in section. It was not even a recommendation of the Ripoll inquiry, but the government wants to bring this opt-in clause into the act straightaway. We do not support that. It is one of the 16 things we want changed in the legislation. The retrospective application of the additional annual fee disclosure requirements is another thing we would like changed. We would also like to see improvement in the drafting of the best interest duty. The ban of commissions on risk insurance also has to be further refined. There needs to be much more clarity for financial providers. That is all I have to say, but I plead with the government to delay the implementation of this bill a further 12 months and to take up all 16 of our recommendations.