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Wednesday, 16 July 2014
Page: 56

Senator FIERRAVANTI-WELLS (New South WalesParliamentary Secretary to the Minister for Social Services) (15:12): I rise to respond to some of the comments that have been made by Senator O'Neill. Can I just underline that the Senate's vote in support of the government's improvements to our financial advice laws is good news for consumers and for small business financial advisers. The most tangible change is that investors will not have to re-sign their contracts with their advisers on a regular basis. Can I just underline that these changes—contrary to the scaremongering that those opposite are trying to peddle—have been assessed by the Office of Best Practice Regulation to reduce red tape costs by $190 million a year. Other changes are more about enhancing competition and certainty in the market, and will deliver benefits for investors over time.

Let me just summarise. The Senate has voted, in my view, for more affordable, high-quality financial advice by removing unnecessary and costly red tape, but, at the same time, maintaining the all-important consumer protections that matter very much to consumers. Let me stress that, consistent with our commitments before the last federal election, the statutory requirement for financial advisers to act in the best interests of their clients remains in place, as does the ban on conflicted remuneration.

It does not matter, Senator O'Neill; you can peddle as much as you like of your misinformation on this point. It remains that that is not the situation. And can I just stress again that the Senate voted for changes that are more affordable and maintain the important consumer protections that matters so much. The statutory requirement for financial advisers to act in the best interests of their clients remains in place, as does the ban on conflicted remuneration.

The government appreciates the constructive approach that has been taken by crossbench senators in discussions about our financial advice laws. Our goal remains to ensure that we have a robust but efficient financial services regulatory system which is competitively neutral so that people saving for their retirement or managing financial risks through their life can access high-quality advice they can trust and which is also affordable.

Could I just put this into context. Labor's changes to our financial advice laws—so-called FoFA changes—went too far and we believe that they imposed unnecessary and costly red tape. They unnecessarily pushed up the cost of advice for investors and reduced competition, meaning that there was less choice for consumers. Changes like forcing consumers to re-sign contracts with their financial advisers on a regular basis have made Australia the world champions in costly and unnecessary financial services red tape. If Labor's FoFA changes had remained in place, without variation, it would have put access to high-quality advice beyond reach for too many Australians who need it. We want people across Australia who are saving for their retirement, managing their retirement or managing financial risks and opportunities throughout their lives to have affordable access to high-quality advice that they can trust. For this we need appropriate levels of consumer protection and regulations and an ongoing commitment from all providers in the financial services industry to continue to lift professional, ethical and educational standards.

We announced our policy to improve Labor's FoFA laws. As the minister said in question time, our position has been clear for over 3½ years. We have been informed by findings of the coalition members of the Parliamentary Joint on Corporations and Financial Services inquiry into Labor's FoFA laws in 2012. I believe our changes provide the right balance for consumers.