Senator LUDWIG (Manager of Opposition Business in the Senate) (2:31 PM) —My question is to Senator Coonan, representing the Treasurer. I refer to the restatement of existing law, described incorrectly as a proposal in CLERP 9, that licensees should disclose any financial interest that they or a related party have in the subject of their advice or recommendation. Can the minister confirm that most research reports issued by analysts would be considered general advice so that a statement of advice setting out conflicts of interest would not be required? Further, can the minister confirm that, even if a financial service guide must be provided, the disclosure obligations in that document do not—and I quote from CLERP 9—`extend to a wider range of potential conflicts of interest'. That is on page 123. What then is the government proposing to do to improve analyst independence?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you, Senator Ludwig, for the question. As most senators would know, the release of the CLERP 9 proposals contained some 41 recommendations and a comprehensive analysis of the issue relating to auditor and analyst independence. The CLERP 9 proposal specifically in relation to analyst independence will require ASIC to provide guidance via a policy statement on both the level and manner of disclosure of analysts' potential conflicts of interest, as required under the general duty that financial services are provided efficiently, honestly and fairly.

These proposals go a significant way towards the very important issue of ensuring analyst independence. Further to providing these proposals in CLERP 9, it is then proposed that there will be an extensive period of exposure and consultation until November so that the views of industry, which have already been fairly widely canvassed, can be taken into account in relation to looking right across the spectrum, including at the very important issue of analyst independence. There is a range of views as to the appropriate response in relation to both auditor independence and analyst independence. The CLERP 9 proposals pick up on the recommendations of the Ramsay report, and it is certainly one of the proposals that has pretty much been broadly supported.

Senator LUDWIG —Mr President, I ask a supplementary question. Can the minister explain how the only other proposal in CLERP 9 to improve analyst independence will be effective? In the absence of any specific law requiring the disclosure of interests that might influence an analyst, how does ASIC's policy statement differ from the current best practice guidelines for research integrity issued by the Securities Institute of Australia and the Security and Derivatives Industry Association?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you for the supplementary question, Senator Ludwig. Those institutions are in fact going to develop the guidelines. There seems to be some misunderstanding here. What CLERP 9 does is to issue some 41 proposals—including one specifically related to analyst independence—so that these matters can be appropriately consulted on. The proposal that is put forward is that this will be adequately provided for in the law and will be enforced by ASIC, which will provide guidance via a policy statement on the level and manner of disclosure. It is obviously an issue which I would have thought those on the other side would be very glad to support. It is certainly a welcome development in looking across the spectrum of corporate disclosure generally. (Time expired)