Senator CORMANN (Western Australia—Minister for Finance) (11:59): I move an amendment to the motion before the chair: That all words after 'shall be called' in paragraph (2) be replaced with 'on 27 November 2014 and have precedence over all other business until determined that day'. The amendment I am moving to the motion is a very important amendment to ensure that we have an orderly and methodical process here in the Senate, that we do not have reckless impacts on a very important industry across Australia through our actions today. The actions in the Senate this morning have already caused a significant level of concern. I will quote to the Senate the media statement that has just been released by the Financial Planning Association. The Financial Planning Association is a professional association for financial planners. It is an association that represents small-business financial planners. It is not an association that represents the big banks—in fact, it is quite removed from any interests relating to the interests of the big banks. The Financial Planning Association is an association, along with others, that has done outstanding work when it comes to lifting professional, ethical and educational standards across the financial advice industry. It is work that the government has been very pleased to be supporting. This is what the Financial Planning Association said this morning in its release, under the headline 'FPA condemns FoFA disallowance motion': The Financial Planning Association of Australia (FPA) today condemned the disallowance motion of the amendments to the Future of Financial Advice (FoFA) Regulations. To be tabled in the Senate today by the Opposition and cross-bench Senators, the disallowance motion threatens to remove the Regulations put in place on 30 June this year which amended the FoFA reforms. "This will have a catastrophic effect across the entirety of the financial services industry, one of the largest employers of people in Australia," said Mark Rantall, FPA CEO "If passed, this disallowance motion will continue five years of uncertainty for financial planners and their clients which commenced when the FoFA process began under the Labor Government. "The industry has been adhering to these Regulations for nearly five months. This disallowance motion has the potential to put the entire financial services industry immediately into breach of the law. "The Coalition's amendments contained in the Regulation ensured the FoFA reforms remained intact in a sensible way that reduced red tape and maintained vital consumer protections. "The original FoFA reforms created unnecessary red tape and compliance driven processes that did not achieve the then Minister's stated aim of improving the quality of advice for consumers." The original FoFA requirements, such as opt-in and retrospective Fee Disclosure Statement (FDS), created back end red tape that did not improve client outcomes or services for clients. Clients agree to set Terms of Engagements with their financial planner, a contract that binds the planner to service agreements but allows the client to legally opt out of the arrangement at any time. Fees and services are properly disclosed upfront under the amended FoFA reforms. The Financial Planning Association represents the interests of the public and Australia's professional community of financial planners. The FPA says of itself: The FPA is unrivalled in its reach of the financial planning market, influence on government and regulators, standards set through a world-class Code of Professional Practice, unique position as the certification body in Australia for the global CFP® designation, and reputation for quality professional development. And: With a growing membership of more than 10,000 members and affiliates, of whom 7,500 are practising financial planners, the FPA is also home to Australia’s 5,500 CERTIFIED FINANCIAL PLANNER® professionals. The point here is that we have 10,000 members of the Financial Planning Association, for example, who are completely disregarded by what appears to be the rushed ambush that is being attempted here this morning. The truth is that, if the intent is to have a considered approach to this policy issue, it is not required. The effect of my amendment is that this disallowance motion would be dealt with and would be dealt with conclusively on Thursday, 27 November, which is when it was listed in the first place. Disallowance motions, as those of us who have been in the Senate for a while would well understand, have 15 sitting days within which they have to be resolved. These 15 sitting days come to an end on 27 November; indeed, this particular motion was listed on the Notice Paper up until today, to be dealt with on 27 November. In a sign of goodwill and good faith, in the way I have crafted the amendment, not only would this disallowance be dealt with on 27 November; it would be dealt with conclusively on 27 November. If my amendment got up, the effect of it would be that we would not be dealing with this today; we would be dealing with it next Thursday. That would give us the time to take a bit of a breather, take a bit of a step back and have some sensible conversations about some of the technical aspects, for example, that need to be tidied up. If there is a majority in the Senate to overturn the regulations the government has put in place, with effect from 1 July, it ought to be done in a more sensible and orderly way. I happen to think that the improvements we have put forward are sensible improvements. But it might well be that the majority of senators in this chamber do not agree with the government. While I am not happy about that, I will have to accept it if that is the case. But to ram this through today without giving ourselves the space to assess all of the consequences and implications of such a move would be irresponsible. Senator Xenophon, in particular, is one who is always a stickler for process. In relation to some other legislation, because there was an amendment to change a particular piece of legislation, he took the view—which is reflected, I believe, in some separate motions before the Senate today—that there ought to be a quick, additional Senate inquiry so that the Senate can be very clear, when voting, as to what the implications of a particular move are going to be. I say to the Senate: be very careful about voting for a disallowance motion today which would have the effect of putting our financial institutions, our financial services providers, in a situation of breach of the law as of today, with all of the consequences that come with that which would force them to expend significant money in order to comply. Even though the Senate might not be supportive of our regulations, there appears to be an appetite for improving the previous legislative framework nevertheless. That means that the industry still has uncertainty and still has to spend money, which ultimately is a cost borne by consumers in order to comply with something that they do not know what it is going to be yet. I would urge the Senate to be sensible in relation to this and to think very carefully about what the implications would be. Beyond the policy driven changes—and, I add, policy driven changes that we took to the last election, that we first announced in March 2012, that we announced as election commitments in the lead-up to the last election, that we have explained in great detail at various times since the last election, that we consulted on extensively for more than a year after we were elected to government and that had been considered by two Senate inquiries, which both recommended their passage—the regulations that took effect on 1 July also provided much needed certainty in a number of areas, including in relation to the application of the rules to existing customers, which is also known as grandfathering. These changes actually had bipartisan support, because this is the third time we are dealing with this disallowance. If the Senate were to reflect on the second occasion we dealt with this, the Labor senator who moved the disallowance actually excluded a series of parts of the regulations from the scope of the second disallowance—in particular, the changes that fixed some problems with Labor's FoFA laws on grandfathering, because they had not been properly thought through. There were unintended consequences. We fixed those unintended consequences. Those fixes—which the Senate has supported on two occasions—if this disallowance is dealt with today and is voted on today, will immediately disappear, creating chaos and uncertainty across a very important industry, a very important industry, I might add, for people across Australia saving for their retirement and managing financial risks through life. The current motion before the chair of course does not include the elements that Senator Dastyari previously excluded from his disallowance motion; it goes well beyond that. The disallowance would take effect immediately, meaning that service providers would need to immediately change contractual arrangements and probably have to stop providing products and services to consumers while they assess their status for compliance with what would become the law. You have to remember that Labor's laws never actually came into practical effect, because the date of the practical effect of the implementation of Labor's laws was 1 July 2014. If this disallowance motion is passed, with the short notice that has been given to everyone, those laws will come into effect as of today. That has serious implications. I say to the Senate: think very carefully about the implications of this; think what it would mean for employees in one sector of the economy, which is the largest employer of Australians—that is a very important point. Beyond that, it is important to remind ourselves what we are actually talking about. We are talking about changes to our financial advice laws which removed, as of 1 July, the excesses of Labor's changes. We have kept the good parts of Labor's changes. We have kept the parts of Labor's changes that improved consumer protections in a sensible way but removed those parts which just pushed up the cost of advice for people across Australia saving for their retirement, without delivering additional consumer protection benefits. Some people might say that every bit of red tape is good, but guess what? Not every bit of red tape is good. Some bits of red tape just add costs without making things better. If you are faced with a problem as a policymaker, you should always focus on only pursuing those changes that make things better. That is the point that I am making to the chamber here today. Why do we— Senator Wong: You are looking a bit desperate now, Mathias. Senator CORMANN: Senator Wong clearly is intent— Senator Wong: You are filibustering so there can't be a vote on it. Senator CORMANN: Senator Wong is quite intent on pressing ahead with a very reckless— Senator WONG: Everybody knows you are filibustering. Senator CORMANN: a very reckless course of action which is going to have disastrous consequences across the financial services sector, if it is allowed. Senator WONG: Filibuster—why don't you sit down and have a vote? Senator CORMANN: Madam Acting Deputy President O'Neill, is it appropriate that a senator in this chamber is arguing that I am not allowed to express my view as a senator? Senator Wong interjecting— The ACTING DEPUTY PRESIDENT ( Senator O'Neill ): Order! The senator can continue his remarks. Senator CORMANN: Thank you very much. We are talking about very important changes to our financial advice laws, which help ensure that we have a robust but efficient financial services system here in Australia—a system where people can have access to high-quality advice they can trust but which also remains affordable. Sadly, here in Australia, we are very good at red tape. We are the world champions in financial services red tape as a result of some of the changes that Mr Shorten, when minister for financial services, imposed. There is no precedent anywhere in the world, for example, for his requirement imposed on clients of financial advisers to re-sign contracts with their financial adviser on a regular basis. There is no precedent for that anywhere in the world. Mr Shorten as the minister for financial services made us the world champions in financial services red tape. None of this comes for free. It comes at a cost. It comes at a cost to the economy. It comes at a cost to people saving for their retirement. And for what benefit? The only benefit is a commercial benefit for industry funds that have always waged a campaign against small business financial advisers because they cannot control them. Small business financial advisers have always focused on the best interests of their clients. Their business model depends on acting in the best interests of their clients in order to keep their customers—do you know why? If a financial adviser does not provide good service to their client, the client will leave. The client will not continue to access services that are not providing quality. But of course, this is where the Labor Party just gets it wrong: the Labor Party thinks that government, through regulation, can eliminate any issue or any problem. You cannot eliminate issues in the economy just by regulation; you can put safeguards in place, but you should not be shutting down the economy. What are the changes that we actually made? What are the changes that the Senate now wants to disallow today and that some senators are saying they want to deal with today—and that we are saying should only be dealt with next Thursday as a result of the amendment that I have moved, because the implications of this change have to be properly considered? In those regulations, we removed the requirement for an investor to keep re-signing contracts with their adviser on a regular basis. That is the so-called 'opt-in' requirement—which makes us the world champions in financial services red tape. We also said that we wanted to simplify and streamline the additional annual fee disclosure requirement. Instead of imposing that change retrospectively, as the Labor Party ended up doing—which, given all of the legacy systems that are involved here, imposes hundreds of millions of dollars in additional costs on the industry, ultimately borne by consumers, in order to comply with that retrospective change—we said that that should only be a prospective change from 1 July 2013. We also said that we would absolutely keep in place the requirement to act in the best interests of the clients—absolutely intact. The change that we made was to improve certainty around the operation of the best interests duty test—the test that indicates whether or not a financial adviser has discharged that particular obligation. We also felt that it was important that we provide certainty around the provision and availability of scaled advice. I might just put to the chamber that if you want to go to buy a tyre, you should not be forced to get comprehensive advice on all of the features of the car. If you want to go to buy a tyre, you should be able to agree that you are only going to get advice on the features of the tyre. Now if you want to get financial advice on a particular aspect of your life, you should not be forced to go through a full fact find and to go through a full screen of all of the issues. It is all designed by Labor and by industry funds just to push up the costs so that fewer and fewer people will access advice, and so that more and more people are channelled into industry funds. The Labor Party and industry funds do not want people to access advice, by and large; they want people to stay away from advice—and just to trust industry funds with their money. That is what is behind all this. That is why the Labor Party is fighting so hard to get this up. But this is not the right way to go. The amendment that I have put forward is eminently sensible. If the Senate is genuinely interested in having a conversation on how our approach can be improved or amended, or if there is a view that the regulatory changes ought to be disallowed, it should not happen today in the way that is envisaged in the motion that was moved by Senator Moore. The Senate should seriously consider supporting my amendment, which would have the effect of dealing with this disallowance motion on 27 November, and dealing with it conclusively on that day, so that there is a proper opportunity to assess all of the implications and all of the consequences of a possible disallowance, and to take corrective action, if and as required in the context of what is proposed. I would have thought that a responsible Senate would take that sort of recommendation on board. What is the rush? Why is it— Senator Jacinta Collins: You have had so much notice of this. How long has this been on the Notice Paper? Why are you so slow? Senator CORMANN: It has been on the Notice Paper since 10 July, Senator, and it was voted it down. And then it was put on the Notice Paper again on 17 July—and it was voted down. And then for technical reasons, the Senate Standing Committee on Regulations and Ordinances put it on the Notice Paper in order to scrutinise various aspects of it. We provided a satisfactory response, and the regulations and ordinances committee decided to remove the disallowance. And Senator Dastyari, using a procedure of the Senate, moved to give himself a third crack at the same disallowance. This has actually been voted on twice before. The Senate has supported our improvements twice before. There was a reasonable expectation across the Australian community that the law which has been the law for nearly five months now was going to be the law that stands. To change that without any notice like this, in the fashion that is proposed, and without the amendment that I have moved to the motion, would be highly irresponsible. It would be highly reckless. I strongly urge the Senate to support the amendment that I have moved to Senator Moore's motion.