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Thursday, 22 March 2012
Page: 4046

Mr OAKESHOTT (Lyne) (17:01): I will be brief as well. I am very aware of all members' time. I am really only speaking on government amendment (1), the insertion of proposed clause 962CA, 'Exemption from application of opt-in requirement'. The key word is 'exemption'. This has been a long and protracted negotiation. What we have now done, through negotiation, is achieve a path of choice for those in small business and those in both the financial planning and the financial advice market.

By 2015 there will be a very simple choice for anyone who is providing financial advice or financial planning services to clients who are mostly looking for security with their retirement savings. But this covers the full range of financial products. That choice for financial planners and financial advisers is either to participate in the opt-in process or to participate in accreditation under an industry code of practice. That will be developed over the next three years under ASIC rules, with full consultation with the industry. Clearly, as the amendment suggests, there is an exemption from the opt-in requirement.

The previous speaker, the member for North Sydney, was correct: there was and is a great deal of concern around the opt-in provisions. For over a year I personally have—and I know other members of this chamber have—been raising those concerns about the dead hand of government regulation in requiring a financial planner or a financial adviser to round up their clients every couple of years and re-sign them to their books.

Regarding other changes coming through in this FoFA legislation, importantly for me the keys are the fiduciary duty of the best interest test and really making the focus client-first. There are still some minor issues in that regard that we will all watch closely. But fundamentally that best interest rule is long overdue for making sure that financial advisers and planners do put their clients interests' first.

The second aspect of importance is the annual full fee disclosure. Again, while there are some issues there, where I personally would have liked to have seen stronger disclosure requirements, such as prospective disclosure—basically a quote for work for the coming year—I am happy to accept some negotiations around that to make sure there is an alternative pathway to the dead hand of government in and around opt-in. An industry code of practice in most professions is a bit of a no-brainer. If this is about cultural change and making sure we professionalise financial planning and financial advice and ensure clients' money gets the best service possible, then it may surprise many in this chamber that an industry code of practice is not already in place.

As an alternative to the opt-in path I think a code of practice is a sensible cultural move. It will encourage greater professional standards. It does so in a way that engages various planners, providers and their organisations and it does allow for a choice, in a voluntary way, to participate in the market under the code of practice. If that is all too hard and for some reason that does not work for you, then quite rightly there are opt-in provisions to make sure you participate in the cultural change and the professionalisation, making sure that we have financial products and financial advice delivered to the standard that I hope this House expects.

I appreciate the negotiations. They have been long and protracted, with all the various groups. I appreciate the minister and his office accepting and working on this amendment. It does now provide choice within financial markets and I think it is a sensible choice. (Time expired)