New shadow Minister for Financial Services, Pat Conaghan, has homed in on Labor’s recent attacks on financial advisers and criticised the government for burying the managed investment scheme review.
The so-called MIS review was brought up by the last Coalition member to lead the portfolio in government, Senator Jane Hume, during a Parliamentary Joint Committee hearing last week. Hume inquired with ASIC’s leadership team over why the government did not seek to act on their recommendations.
The review was included in the October 2022 budget after the new Labor government ended up excluding MISs from the Compensation Scheme of Last Resort.
Conaghan said it was a “bizarre move” to bury the review and not release findings.
“Labor knew about these regulatory gaps,” Conaghan said in a media release. He had previously said if the government had moved faster, the losses seen in the collapse of Shield and First Guardian master funds might have been avoided.
“Now they’re scrambling, trying to pin this mess on anyone else to cover their own inaction.
“On Thursday, we saw ASIC Chair Joe Longo forced to remind Labor Senators that Australia is governed by the rule of law,” said Conaghan.
The failed Shield and First Guardian have left $1.2 billion in retirement savings in limbo.
ASIC has alleged that lead generation companies were paid by the funds via the financial advice firms to push consumers to rollover the super funds.
The regulator has alleged the funds invested in high-risk assets which weren’t labelled as such, and were conflicted, with funds being allocated to the pet projects of directors, and further misuse of member money for personal expenses including luxury houses and cars.
Conaghan said Labor is shifting blame to the regulators instead of taking accountability for years of inaction in regulatory gaps, including gaps in the anti-hawking provisions and no outcome of the MIS reviews.
Anti-hawking measures were introduced in the “Red October” suite of post-Hayne royal commission reforms in 2021, which were designed to prevent unsolicited selling of financial products but a loophole in the law still allows for the provision of unsolicited contact to sell financial services.
Last month, Super Consumers Australia called for an end to the anti-hawking loophole.
Conaghan also noted Labor’s attacks on financial advisers, which had drawn a rebuke from the corporate regulator itself.
Longo had to tell O’Neill not to “demonise all advisers” after criticising the broader profession despite only 140 advisers being examined for their role in the collapse of the funds, many of which have “lawyered up” in anticipation of a more formal investigation.
There are 15,418 advisers listed on the ASIC Financial Advisers Register, according to last week’s analysis from Wealth Data.
“Smearing advisers won’t fix broken laws,” Conaghan said.
“We need targeted action against fraudsters, their business models, and the loopholes they exploit. But on Thursday, we saw the same old Labor, and I fear all they’ll offer is more ideologically driven red tape that hurts legitimate businesses while doing nothing to protect consumers.”
Conaghan also accused Labor of taking an aggressive line of questions with Longo because they knew in advance he wouldn’t be seeking reappointment.
“It’s clear from their aggressive questioning Labor already knew Longo wasn’t going to seek another term,” Conaghan said.
“Labor is clearly trying to find anyone or anything to put the blame on because they know they’re exposed. They’ve sat on reviews, ignored warnings and failed to act.”
