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Thursday, 25 September 2014
Page: 7152

Financial Services

Senator DASTYARI (New South Wales) (14:09): My question is to the still Acting Assistant Treasurer, Senator Cormann. Is the minister aware of comments by John Brogden of the Financial Services Council that:

The reality is that public trust is so low, public expectations are so low, yet public demand for advice is so high that we have to acknowledge that self regulation has failed and we need to go to government and independent regulation.

Minister, is Mr Brogden correct?

Senator CORMANN (Western AustraliaMinister for Finance) (14:09): Mr Brogden is a very good man. He is the CEO of the Financial Services Council, which represents, by and large, the banks and larger institutions. Mr Brogden, of course, is quite entitled—and, indeed, he has the responsibility—to present the views of the banks. My responsibility is to make judgements and decisions in the public interest. Now, in relation to the specific question that was asked, all of us—

Senator Wong: He does not agree with you, Mathias. Self-regulation has failed!

Senator CORMANN: This is an area that is highly regulated, Senator Wong. You might not be aware of this.

The PRESIDENT: Through the chair.

Senator CORMANN: It is a highly regulated area already. We need to ensure, as policymakers, that we have a robust but efficient regulatory system in place that is competitively neutral and, of course, ensures that people across Australia saving for their retirement and managing financial risks can access high-quality advice they can trust that is also affordable. Now, I disagree with Mr Brogden's call for more bureaucracy in this particular space, because more bureaucracy is not the answer. I think it is an absolute cop-out for Mr Brogden to throw his arms up in the air and say, 'We cannot do more to provide leadership to the industry to ensure that we ourselves continue to lift professional, educational and ethical standards.' Of course, we are all in favour of higher professional, ethical and educational standards. But guess what: regulation ain't going to be the answer to all of that. The industry itself has to do the heavy lifting, as well. To put up the white flag and say, 'Sorry, but we cannot do it; you do it for us,' is just wrong. The Financial Planning Association, the Association of Financial Advisers, the SMSF Professionals Association are all organisations that have shown great leadership in working hard to lift standards across the financial advice industry. I call on the Financial Services Council to do the same. I do not accept that the only alternative— (Time expired)

Senator DASTYARI (New South Wales) (14:12): I am keen to just keep giving him more time.

Senator Cormann: Please!

Senator DASTYARI: Mr President, I ask a supplementary question. Given that AMP, the Commonwealth Bank, NAB, Macquarie, ANZ and Westpac have now all said that standards in financial services need to be higher and that the chair of the financial services inquiry, David Murray, says the sector needs to, and I quote:

…build trust with their own customers—

why is now the right time to bring back secret sales bonuses?

Senator CORMANN (Western AustraliaMinister for Finance) (14:12): Firstly, we are not bringing back secret sales bonuses, so I reject that entirely. Secondly, all of us agree that we need to keep lifting professional, ethical and educational standards across the financial advice industry—of course. The question right now that is before us is on how best to keep going down that path. From my point of view I think we need to do it in a way that delivers genuine improvements in the most efficient way possible so that we do not keep pushing up the cost of advice for people across Australia that are saving for their retirement, because the costs of whatever regulation we put in place comes out of people's retirement savings, ultimately. Right now, as a result of our agreement with the Palmer United Party and Senator Muir from the Australian Motoring Enthusiast Party and supported by Family First and the Liberal Democrats, we are progressing an enhanced public register of financial advisers which will provide transparent information about financial advisers' credentials, education and status in the industry— (Time expired)

Senator DASTYARI (New South Wales) (14:13): Mr President, I ask a further supplementary question. Noting the minister's approach has lost the support of the Council on the Ageing, CHOICE, victims' groups, National Seniors, the banks and even the Financial Services Council, when will the good senator from New South Wales, Senator Arthur Sinodinos, be brought back to fix up this policy mess?

The PRESIDENT: Minister, you can answer any part of that question that fits within your portfolio responsibility.

Opposition senators interjecting


Senator Kim Carr: Has he got another appearance coming up? He has, hasn't he? You're a bit worried about it, aren't you?

Senator Cash: When will Stephen Conroy be brought back to be the leader?


Senator CORMANN (Western AustraliaMinister for Finance) (14:14): Of course, all of us on this side of the chamber are very much looking forward to our very good friend, valued colleague and the great senator for the great state of New South Wales, Senator Sinodinos, taking back responsibility for this portfolio. In the meantime, I will continue to work hard to implement the commitments we took to the last election, to improve the mess that Labor left behind. We know that Labor in government was driven by doing the bidding of the union movement, delivering benefits for the commercial interests of the union movement. We are focused on the public interest. We are focused on making sure that we have an efficient, competitive regulatory system in place where people across Australia managing financial risk can have access to high-quality advice they can trust which is also affordable. This is an area that is riddled with vested commercial interests. Indeed, the Labor Party may be said to have a political interest, where we will focus on the public interest. That is what I will continue to do in my remaining time.