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Thursday, 22 March 2012
Page: 4058

Mr HOCKEY (North Sydney) (18:00): Amendment (1) changes the wording of the catch-all provision in the best-interest-duty paragraph—paragraph 961B(2)(g). However, this amendment is not sufficient to provide an appropriate reasonable-steps defence. Therefore we oppose amendment (1). Our coalition amendment (6) seeks removal of paragraph 961B(2)(g), which will provide certainty for the industry by ensuring that there is a reasonable-steps defence. The government amendment is, of course, redundant if they support ours—but ours is not being dealt with first.

Amendment (2) we do not oppose. It adds a note at the end of paragraph 961B(2) to indicate that best interest duty would allow for scaled advice to be provided.

Amendment (3) we will not oppose but, again, ours is a better amendment. This is an attempt to ensure that there is a causal link between the advice provided and the ban on conflicted remuneration, which is what coalition amendment (10) does. It is aimed at execution services such as stockbroking. However, rather than provide for a causal link, this government amendment sets a 12-month period, which does not create the right link. This may become a genuine problem if a client has sought financial advice from a bank as a financial advice client and then, within a 12-month period, seeks completely independent execution-only stockbroking from the stockbroking arm of the same bank.

So, just to provide absolute clarity, this is going to create confusion for those people who, for example, bank with the Commonwealth Bank, get financial advice and then go separately and engage in trading with CommSec. Coalition amendment (10) cures the actual problem in the bill. It should be supported, because it does not set a time period. It sets an actual causal link between the advice provided and the later investment decision. That is why we are insisting on our amendment.

Amendments (4), (5) and (6) we do not oppose—but, again, ours are better amendments. These amendments tend to clarify that all existing arrangements entered into prior to the commencement of the FoFA legislation will be grandfathered. However, the amendment leaves it up to the courts to decide what is allowed and what is not. So now small businesses are going to go to court to determine what is in and what is not. Our coalition amendments (26) and (27) provide for certainty by grandfathering all existing arrangements without the need for costly, time-consuming and uncertain legal action.

Again, I emphasise to this House that if it passes these amendments it will regret its actions. Those people who support these amendments will rue their actions. This means more red tape for small business and more red tape for consumers. It is not only anti productivity; it is yet another example of dumb amendments to a dumb bill.

The SPEAKER: The question is that the amendments be agreed to.