Coalition senators were left stranded in the Senate yesterday as Labor's key members seemingly abandoned the final debate over the government's financial advice reforms.
Senators John Williams, Helen Kroger, Cory Bernardi and opposition assistant treasury spokesman Mathias Cormann addressed an almost empty Senate yesterday ahead of the passage of the Future of Financial Advice (FOFA) reforms.
The senators used their time to voice their disappointment in the Labor government's approach to the reforms as well as push for further amendments that, in their view, would improve the legislation and allow its full passage.
Senator Williams expressed his concerns over the reform's push for changes to adviser remuneration, in particular the industry's transition to charging upfront fees for clients.
"I hope if we have upfront fees it doesn't scare people away from advice," he said.
He said no doubt with the introduction of the legislation in its current form "people will leave the industry".
The introduction of opt-in under the advice reforms would "lead to more red tape to financial planners and consumers", he said.
"Does it surprise anyone that the Labor government is introducing more red tape? It wouldn't shock anyone," he said.
He said if the government allowed the coalition's proposed amendments, it would help improve the legislation.
"If you don't make it better, then no doubt the coalition will not support it," he said.
"I hope the guillotine doesn't drop on this important bill ... this is important legislation. I hope the Greens will look at this legislation . I hope the Greens show some commonsense so we can make this legislation better."
Kroger, the chief opposition whip in the Senate, acknowledged the "vital" role financial planners played in the lives of Australians.
"I know as a former small business owner how helpful this advice can be at times when you need a second opinion or help through the paperwork," she said.
"They don't have the time to do the due diligence or look at various options, their focus is on keeping the doors open and being able to support the staff and families ... so this [advice] industry is an important industry for them."
She said it was critical that the reforms put in place resulted in a "robust framework".
"We will always support legislation that improves regulation that makes the industry . more cost effective for everyone," she said.
"We're here to help the industry to achieve a balance in consumer protection and access to high-quality financial services ... in its current form [the legislation] does not achieve that either.
"The coalition cannot support this legislation without a series of significant amendments."
She said if the government had accepted the "reasonable reform" by the Parliamentary Joint Committee on Corporations and Financial Services, there would have been a different outcome.
Coalition senators had watched with "absolute despair" and had been "completely baffled" by the changes that had been made to FOFA with "no clear implications of the consequences".
Kroger also used her speech to address the government's "favour" to its "union friends" and said the legislation would create a "perfect recipe" for industry confusion.
She cited the implementation costs of $700 million and then $300 million a year to comply with the reforms as another Labor failure.
"If the government doesn't understand the impact the legislation will have, how on earth will the financial services industry and their clients?" she said.
As well as questioning the government's understanding of FOFA, she also called for the release of a regulatory impact statement.
"The government has missed an opportunity to provide clear and effective reform," she added.
Bernardi, who has previous experience in the financial services industry, said the government had failed to understand that in the "overwhelming majority" advisers did the right thing by their clients.
While he said the financial services industry had been hit by the global financial crisis, and causes of fraud and deception, the industry had existing regulators in ASIC and rules under the corporations regime.
"If the government is looking to penalise an entire industry for the [activities of others], it would appear that this bill is going towards that way. It's the wrong approach to take," he said.
Meanwhile, Cormann "strongly" encouraged the Greens to give serious thought to the legislation, adding that the Senate had not had enough time to debate the FOFA bills.
"They [Labor] want to ram this bad, job-destroying [legislation] through the Senate other than to debate the amendments," he said.
Yesterday afternoon, a full Senate reconvened to vote on the FOFA bills.
As part of the vote, the Senate rejected the proposal by the opposition to make amendments to the bills, with the passage of FOFA moved 34 votes to 28.
