In 2012, along with the member for Oxley, I travelled to Wollongong as a member of the Joint Committee on Corporations and Financial Services. At that public hearing in Wollongong we listened to the stories of hundreds of mum and dad investors who had lost their life savings in the collapse of Trio Capital.
They were harrowing stories of people pleading with the government to do something about what had occurred in their circumstance. There were certain characteristics of those individuals and their plight with respect to Trio. The characteristics are as follows. Most of these people were nearing retirement. They had worked all of their lives, predominantly in the mines or steelworks around Wollongong. They had been targeted by shonky people who were out to steal money.
They had been advised by their local financial planner or their accountant to invest their superannuation savings in Trio Capital. They had been advised to do it. Many of them had also been advised to establish a self- managed super fund as the vehicle to make the investment in Trio Capital.
Most of these people were telling us at the inquiry that they signed forms establishing self-managed super funds, but they did not even know that they had their own self-managed super fund. They did not know that the forms they were signing were actually establishing a self-managed super fund, that they had got out of their industry fund, out of the protection of the Superannuation Industry (Supervision) Act—they swam outside the flags, if you like—and had lost the protection of that act when the collapse occurred.
Some of these people had to remortgage their houses. They were in their 60s, they had worked all their lives and they had remortgaged their house to invest more into Trio Capital. So not only did they lose their life savings but they lost their kids inheritance as well. These people were pleading, begging the committee to do something to ensure that this situation could not happen again.
What would a good government do in that circumstance? Would you just ignore the concerns of those people and what had happened to them at the whim of shonky financial advice? This was not an isolated incident. Unfortunately, it had occurred in the past in respect of Storm Financial, Opus Prime and Westpoint. These were not isolated incidents. Hundreds of Australians, thousands of Australians, had lost their life savings because the financial laws in this country were inadequate. So the previous Labor government did something about it.
We did not sit on our backsides, we did not ignore the pleas of these people; we did something about it. We instituted the Future of Financial Advice reforms. They are not groundbreaking reforms; they are simply reforms that avoid the situation that many of those people got themselves into where they did not know that they had established a self-managed superannuation fund.
How can it possibly be under Australian law that you could establish a self-managed superannuation fund and not know about it? That is what occurred in the case of Trio Capital because the law did not protect them. The law did not say that their financial adviser had an obligation to act in their best interests. The law did not say that their financial adviser had an obligation to tell those people where the commissions that they were receiving on providing that advice were going.
That is what Labor did with the Future of Financial Advice reforms. That is what a good government does: it protects the vulnerable in our community from the advice of shonks, the advice of people who are out to steal their money. That is what we did with the Future of Financial Advice.
What would a bad government do? A bad government would repeal those reforms. A bad government would repeal those protections that were put in place to protect the vulnerable, and that is exactly what has occurred with the Future of Financial Advice reforms in the repeal of some of those important annual disclosure provisions which simply require a financial adviser to disclose the fees and commissions that they are receiving on behalf of product sellers and their obligation to act in the best interests of the client. This is not groundbreaking stuff; these are basic protections for people.
What is the view of Choice? What is the view of the organisation that is established in Australia to protect consumers? This is their view. They say:
The proposed Bill, that is, the bill to repeal the FoFA, would substantially weaken consumer protections and undermine the original goals of the FoFA reforms: to improve the quality of financial advice and build trust in the financial planning industry.
This was in the wake of a series of high-profile scandals that saw consumers lose hundreds of millions of dollars. That is the view of the independent protector of consumers in this country.