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Thursday, 22 March 2012
Page: 4047

Mr HOCKEY (North Sydney) (17:07): I suspect that the member for Lyne did not negotiate in good faith. I expect that he simply, as he does on so many things, negotiated as effectively a Labor Independent, because we do not know what the purpose is of this ASIC exemption from the application of the opt-in requirement. The minister has insisted throughout the FoFA process that opt-in is a critical requirement. What has occurred to make the minister change his mind to provide an exemption? What is the information? What is the evidence? Where is the convincing argument? The financial planners already have a code of practice. What about the others? Are they going to satisfy an ASIC test? How is ASIC going to—

The SPEAKER: The honourable member for North Sydney should address his remarks through the chair.

Mr HOCKEY: How is ASIC, Mr Speaker, going to determine whether a code of practice is acceptable or not? Is it going to be a code of conduct? Is it going to be a voluntary code of conduct that needs to be signed off by the ACCC, or is it going to be a mandatory code of conduct that again needs to go through the ACCC? What are going to be the requirements for people who have to comply with the code of conduct?

Effectively what you will have is two sets of laws. You will have the code of practice or the code of conduct that now the member for Lyne takes great pride in imposing on the entire financial services industry, and then you are going to have the laws themselves. If the code of conduct is accepted by ASIC then all those industries that are out there are going to have to change their software, change their application forms, change their processes and go through the education and training. What do they do all of a sudden? Do they stop? Because opt-in is meant to start.

When does opt-in start—1 July 2013; is that right? Or 1 July 2012? When does opt-in actually start? And, if it starts on 1 July 2014, how are people meant to go about getting their codes approved by ASIC and potentially the ACCC in the process and set up compliance mechanisms for the codes prior to getting that approved by ASIC? And, when it is approved by ASIC, does that mean they do not have to go with opt-in at all? Under this sham arrangement, it may well be the case, but it means that they have the red tape of compliance all the way. For a single financial planner in a country town, they have just been knifed by the Labor Independent member for Lyne and the Labor Independent member for New England.

Is it not correct to say that vast numbers of groups in the financial services sector were not even consulted about this amendment? The minister can tell us which major groups were involved in negotiation on this. When is it anticipated that ASIC will actually make the class order exemption? Will the exemption be made before or after the commencement date of FoFA? Is it likely that the industry will need to implement, as I said, significant and costly changes to be opt-in and then to be opt-out afterwards? Has there been any cost-benefit analysis of this additional red tape for the industry?

We do know that ASIC is going to approve, or not approve, the code of conduct, but what form will the code of conduct take? There are no explanations there either. What we have got out of all this is that the government is just loading more red tape on individuals and more red tape on financial planners and financial advisers. How will consumers be able to determine whether their financial adviser is subject to opt-in or not subject to opt-in? How will that be disclosed to a customer? How will the exemption operate in practice? If someone agrees to contract to the financial adviser at a time when the financial adviser is subject to opt-in, will the opt-in arrangements continue to apply if at a later date the financial adviser becomes exempt from the requirements?

Is the code of conduct likely to be determined by some other non-government body? If so, which non-government body? Will ASIC be able to approve more than one code of conduct in relation to the exemption for individual players? Will the code of conduct mandate or impose any continuing professional education requirements?

These are questions that are not answered. All we have had is a shonky deal between two Labor Independents and the Labor Party to get opt-in through. And the member for Lyne is going to go back to his electorate and he is going to say to them, 'Don't worry, guys; I defended your interests,' and not tell them the fact that they are going to be burdened with a vast amount of new red tape thanks to the government and the Labor Independents.