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Future of Financial Advice
It is disappointing to see members opposite engaging in this overblown rhetoric and hyperbole. We saw it from the member for McMahon at the beginning of the MPI. I can understand that the member for McMahon would have been very embarrassed by his two very ordinary questions in question time and probably sought to atone for that, but I think we just need to settle the debate and talk about the facts.
We are not proposing to repeal protections here. We are improving these rules in line with our election commitments, and 2014 is the year when the coalition government will deliver on each of those commitments that we made prior to the election. We are not proposing to get rid of the requirement that financial advisers act in the best interest of their clients—quite the contrary. As members on this side have said earlier today, we are focusing on the fiduciary duty that financial advisers owe their clients. It is very heroic for any government to assume that they can look into a crystal ball and see what each possible problem may be between a financial adviser and their client. But if we focus on the fiduciary duty that applies, and that is that the financial adviser always acts in the best interests of their client, then that is a good place to start.
We are not proposing to reintroduce commissions or other conflicted remuneration structures. That is just wrong, so the overblown rhetoric of those opposite is going to blow up in their faces, because when the facts come to light, as the review will ensure happens, all of the inaccuracies propagated by those opposite will come to light. Instead, we are restoring a level playing field across the whole financial services market, ensuring that everyday consumers of financial advice can continue to access robust financial advice, personal to their own circumstances and in their best interests. We agree there is a significant public interest in ensuring that financial advice laws are transparent and competitive in a financial services system, but we are also concerned that consumers actually have access to that advice. If we create a regulatory system around the access to financial advice that disenfranchises one consumer from getting personal advice for themselves, then we have done a disservice to them.
In ensuring that we provide that access to all consumers, we want to ensure that people who are saving for their retirement have certainty in the advice that they are receiving. We are not seeking to throw the baby out with the bathwater in that sense, but a balance has to be reached, and that is what the coalition’s version of these rules will ensure. Do not take our word for it. Listen to some eminent people in the markets. Those opposite, who mostly have never worked in the private sector, should listen to this. Ian Narev, the CEO of the Commonwealth Bank, said that Australia’s financial planning industry is too heavily regulated and customers will be better served with fewer regulations. Steve Munchenberg, the chief executive of the Australian Bankers’ Association, described the changes as sensible and claimed that their opponents—that is, the members opposite—had been circulating disinformation about their impact. These are eminent people in the financial services industry.
In my electorate of Deakin, I have spoken to many consumers and providers of financial advice, and, in these discussions, two prevailing themes have come through. For everyday investors, there was justifiable anxiety that the additional cost that they would face in accessing financial advice would mean that they were unable to afford it. The view of financial advice providers has been that FoFA is unworkable. One provider sent me an email this morning that said, ‘I don’t think any AFSL holder is ready for it’—being FoFA—’and we are meant to be compliant already.’ This observation is confirmed by the fact that the costs and disincentives of Labor’s FoFA mean it just is not workable, and our changes are extremely important.