Senator the Hon Mathias Cormann
Minister for Finance
CHRIS UHLMANN: It’s not a back down or a sign of failure. It’s a pause while more information is gathered. That’s how the Abbott Government is describing its decision to delay controversial changes to financial laws that were to be part of its red tape bonfire. The plan has faced sustained pressure from consumer groups which say it will water down protections, like the requirement that financial advisers act in the best interest clients. And although Federal Finance Minister, Mathias Cormann says he wants more consultation on the Government’s plan, he’s determined to go ahead with what’s already been announced. Simon Lauder reports from Canberra.
SIMON LAUDER: When he was still the Assistant Federal Treasurer, Senator Arthur Sinodinos was determined not to let an uncooperative Senate get in the way of his plans for the financial services industry. Changes in regulation were imminent, until the Government’s plan could be cemented in legislation. Now that Senator Sinodinos has stood aside, the Finance Minister, Mathias Cormann is in charge of the changes and he’s not in such a hurry.
MATHIAS CORMANN: I will not be proceeding right now with the related Regulations. I will do some further consultation with key stakeholders. Essentially to make sure that everybody clearly understands what it is the Government is doing... interrupted
SIMON LAUDER: It’s a back down though on your plan to go with the Regulations this week and the fact that you’re doing further consultation implies you’re open to compromise.
MATHIAS CORMANN: Not at all. It’s not a back down at all.
SIMON LAUDER: Why is there that lack of clarity? Had Arthur Sinodinos failed to consult properly?
MATHIAS CORMANN: No, not at all. This is a highly technical area. Some people are not necessarily interested in providing a fair representation of what it is that the Government is doing, we understand that.
SIMON LAUDER: The delay comes as the Government faces a growing backlash from groups including National Seniors, the Financial Planning Association and the consumer group Choice. They say the Government is about to weaken consumer protection. Mathias Cormann has given no indication that he plans to compromise on two of the most contentious changes.
MATHIAS CORMANN: What we’re doing is we’re providing more certainty for financial advisers on the obligations that they have to meet, in order for...interrupted
SIMON LAUDER: You said before that you’re getting rid of that provision though, will you go ahead with that plan?
MATHIAS CORMANN: Absolutely, but let’s just be clear. That is not in any way weakening the Best Interest Duty, it actually strengthens it, because it provides more certainty to consumers and to financial advisers on what the obligations for the financial advisers are. All throughout the legislation, there are very specific references imposing that Best Interest Duty on financial advisers. That will remain. Of course, it is only complementing the fiduciary duty for financial advisers under common law, which also remains.
SIMON LAUDER: You’ve said also that you’ll make general financial advice exempt from the ban on conflicted remuneration. Will you still go ahead with that?
MATHIAS CORMANN: We don’t accept that product providers, providing incentives to their employees in relation to general advice about their products is conflicted advice.
SIMON LAUDER: The chief executive of Industry Super Australia, David Whitely is hoping that the Government will respond to concerns.
DAVID WHITELY: We would hope that the Government takes the opportunity to reconsider their current position.
CHRIS UHLMANN: David Whitely from Industry Super Australia ending Simon Lauder’s report.