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Thursday, 5 December 2002
Page: 7317

Senator MURRAY (5:16 PM) —My evolution did not work, I see. I move Democrat amendment (R2) on sheet 2670 revised:

(R2) Schedule 1, item 1, page 5 (after line 30), at the end of section 54-10, add:

(4) Before entering into a *structured settlement, the injured person must obtain independent financial advice about the best choices and the process and consequences of entering into a *structured settlement.

This amendment refers to the issue of independent financial advice. The amendment would require compulsory independent financial advice to be provided to the victim prior to their entering into a structured settlement. Although there are other acts that might impact upon these arrangements, it would be useful—and we think a necessary addition—to have this requirement within the current legislation. It would provide added security and confidence to the victim in a financial sense if this requirement were included.

The payment of annuities is not dependent upon invested income once an agreement has been reached; rather, it sets out what payments, over what time and at what rate they will increase by, in providing assistance for the victim. Thus it is not necessary to have or to rely upon any particular financial group to set out investment or to work towards any greater investment returns, which can mean that the return to the victim is less than it would otherwise be. It is necessary to ensure that the victim is provided with moneys to cover expenses that would occur and a reasonable, regular disposable income.

If you put into this equation independent financial advice, you do provide for a levelling of the bargaining field between the victim and the insurer, and would provide for a fair assessment of the offer or offers that are being put forward. It is also guards against any undue or improper direction by some insurers. For anyone who does not believe that insurers can behave improperly, we know that there is a royal commission into one right now. This advice could reach not only the bounds of servicing the financial needs of the victim now and in the future but also advice on the quality of the return rate from a suggested annuity provider. I think that goes some way to satisfying concerns others have raised.

This is speculation and, while I am prepared to put forward amendments that offer consumer protection, I think it is necessary to recognise that the government has set a precedent elsewhere, and quite properly, to reinforce the issues of independent financial advice, simply because of the abuses that have been well recorded. At other times with regard to other debates, both the opposition and the Democrats have congratulated the government on pursuing that issue to some degree. So, if you like, this just continues that approach. We do think it is workable. This sort of approach is within family law, it is within the dairy industry adjustment program and it is within other sorts of acts.