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Thursday, 5 December 2002
Page: 7318

Senator SHERRY (5:20 PM) —The Labor Party supports this amendment. That might surprise some of my fans in the financial planning industry, of whom I have been somewhat critical in recent times—certainly not critical about the need for financial advice for various financial products but about the way in which it is paid for. In these circumstances where a person is going to lock in an income stream for a very long period of time—it could be for 20, 30, 40 or 50 years even; over the remainder of their life—they really have to make sure that they have taken independent expert advice about the structure of that income stream, because it is very difficult, if not impossible, to revisit that decision once it has been made.

We endorse the concept that you would go and seek independent advice. We do think it is necessary. Regrettably, the degree of financial literacy in the broader community is not high and, while we can make best efforts to improve education in this area, there is a need in these circumstances—and I think it is a compelling argument—for people to seek some independent financial advice from an appropriate adviser. I would indicate, however, that if we see a misuse of this provision in the sense of the issue I referred to earlier about the development of trail commission products, which the Labor Party strongly criticised, we would revisit the issue. But I think that, on balance, seeking independent financial advice is critical, given what are in many cases very substantial amounts of money locked in for very long periods of time. So we have decided to support this. We think it is necessary. It certainly should be test run, if you like, for a period of time. If abuse emerges then I put on notice to the financial advice and planning industry that we will deal with that if it happens.