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Labor shuts down debate on flawed FOFA changes

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Media Release Senator Mathias Cormann Shadow Assistant Treasurer Shadow Minister for Financial Services and Superannuation

12/0620/PK 20 June 2012

Labor shuts down debate on flawed FOFA changes

Labor has arrogantly shut down debate in the Senate and rammed through its flawed Future of Financial Advice legislation without allowing any debate at all on 63 separate amendments.

The government even gagged debate on its own confusing and convoluted amendments that would introduce a complex floating start date for FOFA, with a soft start date on 1 July 2012 and a hard start date one year later.

It is extraordinary but typical of Labor's mismanagement of the whole FOFA process that this legislation is being rushed through Parliament just 10 days before its proposed start date.

The important regulations that underpin the FOFA legislation have yet to be finalised.

The further ASIC guidance that is required to provide certainty for consumers and financial advisers is unlikely to be published until the end of 2012 and ASIC will not release the Code of Conduct for financial advisers until sometime in 2013.

It is illogical to expect financial advisers to comply with FOFA on 1 July 2012, even on a 'soft start' basis, when the regulations, guidance and code of conduct will not be in place on that date.

If the government had not gagged debate it would have been able to consider the merits of the Coalition's sensible amendment to have one fixed starting date for FOFA on 1 July 2013.

Debate was also gagged on a series of other sensible and constructive Coalition amendments that would have fixed Labor's current FOFA mess.

The Coalition in government will fix FOFA by implementing all of the 16 recommendations we made as part of the Parliamentary Joint Committee inquiry into this legislation. These changes will include: the complete removal of Opt-In;

the simplification and streamlining of the additional annual fee disclosure requirements; improving the Best Interest Duty; providing certainty around the provision and availability of scaled advice; and refining the ban of commissions on risk insurance inside superannuation.

The government's handling of this legislation has been rushed, inept and chaotic.

The Labor government, with the support of the Greens in the Senate, has once again supported flawed legislation and it will be up to a future Coalition government to clean up their mess.

MEDIA CONTACT: Senator Cormann 0411 874 546