Thank you John.
It gives me great pleasure to open this annual Superannuation Conference.
I am encouraged by the theme of this years conference which is: A Mardi Gras of Information.
Encouraged because most people think of superannuation more as a maze than a mardi gras.
As a Government, we are acutely aware of the complexities that govern the legislation and regulation of the superannuation industry -- and we are doing what we can to address them.
Today, I want to talk about the regulatory framework we are putting in place for the superannuation industry and changes that will affect the industry under the CLERP 6 reforms.
I will also outline the steps you can take as industry representatives to be actively involved in this process.
Regulatory reform has been a hallmark of the Howard Government.
It is a fundamental plank in our commitment to establish Australia as a global financial centre, which will in turn assist the Governments broader policy objectives of increased employment and sustainable economic growth.
The regulatory framework we have put in place over the past three years has given our financial system and economy the resilience to weather difficulties such as the Asian financial crisis.
As a result, Australia now outperforms not only its regional neighbours but most of the world in terms of economic growth.
We are also considered world leaders in regulatory reform.
Our reforms in financial system regulation following last years Wallis inquiry have been hailed by the International Monetary Fund as "path-breaking reforms, which put Australia at the forefront of international practice".
When it comes to superannuation, the challenge is setting a regulatory framework that provides strong consumer protection without bogging the industry down in mountains of red tape.
You may well argue the mountain is already upon you. Certainly we are taking steps to simplify the regulation of the financial services industry, including superannuation.
Above all, we are making these changes in partnership with industry and consumer groups to ensure policy that is relevant and practical and workable.
I now wanted to discuss the regulation of superannuation, which I must stress, that at all levels, is changing.
On the Government front alone, we now have three Ministers with varying responsibilities for superannuation policy - the Treasurer, the Assistant Treasurer and myself as Minister for Financial Services and Regulation.
My responsibilities lie in financial system regulation and enhancement, market integrity and consumer protection.
In superannuation, they cover issues such as:
- prudential regulation under the Superannuation Industry (Supervision) Act;
- financial sector levies;
- licensing of financial service providers;
- regulating how they conduct themselves in dealing with clients;
- disclosure requirements; and
- dispute resolution.
One of my key Ministerial duties is to ensure there are close links with industry and consumers and that those views are given a clear voice in Government.
Industry groups such as the Law Council have a valuable contribution to make in formulating policy.
You have the hands-on experience with the practical application of policy that we, as politicians, dont. As such, youre in the ideal position to judge what works and what doesnt.
Without the input of industry groups such as yours, we risk developing policy in a vacuum.
I make this point because I notice that while the Law Council made a submission to the Financial System Inquiry, it did not make a submission on the CLERP 6 position paper.
I want to take this opportunity today to remind you that my door is open. In fact, part of my Ministerial charter is making sure people come through it.
So, at a Ministerial level, there is now a more streamlined approach in relation to the financial services industry.
We have also taken steps to bring this streamlined approach to the administration of the industry.
Before the Wallis reforms the Insurance and Superannuation Commission often played a dual role, advising the Government on the content of the law as well as administering it.
The Howard Government has now separated those responsibilities.
For the most part now Treasury advises on legislative policy.
Administrative and regulatory policy rests with the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission -- APRA and ASIC.
This approach is based on a model which has worked well in the past with the Australian Securities Commission.
That does not mean, however, that the regulators are frozen out of legislative policy. They have close links with Treasury to ensure their continuing input in this area.
The Financial Markets Division of Treasury already had a close relationship with ASIC in relation to companies and securities regulation. Those consultative arrangements have been extended to cover the new areas of responsibility.
Treasury and APRA have also recently signed a Memorandum of Understanding. Under that agreement, Treasury must consult with APRA in formulating legislative policy.
APRA, for its part, must consult with Treasury on substantive development of prudential standards and informal policy guidelines.
As a result of the consultative arrangements the Government now has the benefit of the views of both the Department and the front-line regulators in making policy decisions.
Turning to the regulators themselves, APRA and ASIC have clearly defined roles in the financial services industry.
APRA is responsible for administrating prudential and retirement incomes matters, while ASIC oversees market integrity and consumer protection.
ASIC chairman Allan Cameron describes their respective roles best.
ASIC, he says, looks after individual consumers, ensuring they receive proper disclosures, are dealt with fairly by qualified people and continue to receive useful information about their investment.
APRA, on the other hand, concerns itself with the health of the institution to ensure it can meet its obligation to its customers collectively.
Despite their different roles, APRA and ASIC work closely together to ensure there are no regulatory gaps or overlaps. This is vital to promoting confidence in the financial system.
This close co-operation is facilitated in a number of ways. The chairman of ASIC is also a member of the APRA board.
Both agencies are members of the Council of Financial Regulators, which is a useful forum for identifying regulatory issues and co-ordinating responses to them.
A Memorandum of Understanding has also been signed between the two agencies setting out the framework for them to work together to achieve enforcement and compliance outcomes.
There are also ample opportunities for industry and consumer input at a regulatory level.
ASIC almost invariably consults with industry and, in many cases, the wider community on regulatory policy issues as they move through policy paper, draft policy statement and final statement stages.
With the new functions ASIC acquired on July 1 last year it has made a conscious effort to foster relationships with its new key stakeholders in the relevant industries.
It has also conducted a targeted campaign to recruit people with knowledge and experience in its new areas of responsibility.
In addition, ASIC has been promoting its new role and informing consumers about their rights.
As you can see, the regulatory framework I have outlined clearly defines the responsibilities of everyone involved, from the Ministers and their Departments to the regulators and industry participants.
It also promotes communication between all of these groups to ensure nothing falls through the cracks.
As a result, the regulatory backbone of the financial services industry has never been so strong or had such freedom to move.
Having dealt with the regulatory framework as it now stands, Id like to now turn to the issue of future reforms in this area, specifically how the CLERP 6 proposals will affect superannuation.
The CLERP 6 proposals for the reform of the financial services industry is one of the major policy proposals within my area of responsibility.
Ive heard the project described as a bit like a duck paddling across a lake -- nothing much happens above the surface but underneath there is furious activity.
Its not a bad analogy. The first 4 CLERP proposals provide major reforms to Australia corporations law in a range of areas. Likewise, CLERP 6 proposes fundamental reforms that extend to other vital aspects of business regulation.
In the 14 months since the release of the position paper, titled Financial Markets and Investment Products, the Government has been consulting with industry and the regulator to develop the proposals further.
The reforms proposed are a significant plank in the Governments commitment to building Australia as a centre for global financial services.
This will contribute to the Governments broader policy objectives of increased employment and sustainable economic growth.
The Governments objective is to achieve a more efficient and flexible regime for the financial services industry, while also providing a safety net for consumers.
To this end, it is proposed that a single licensing, conduct and disclosure regime will cover all financial service providers.
basically, anyone advising on, dealing in, selling or making a market in financial products; operating a managed investment scheme; or providing a custodial or depository service in relation to a financial product will require a licence.
The proposals will provide benefits for industry and consumers, including much simpler administration.
For example, you will no longer require separate licences to act as a securities dealer in relation to superannuation and an insurance broker. A single licence issued by ASIC will cover both activities.
The streamlining of the conduct and disclosure requirements will also benefit financial service providers. It means simply that someone dealing in or advising on a range of products will only have to comply with one set of requirements.
In relation to financial products, CLERP 6 has proposed a single disclosure regime.
This proposal is still being developed. But it would set disclosure requirements across all financial products, other than securities.
The regime would spell out point of sale disclosure requirements, periodic reporting requirements and continuous disclosure obligations.
The intent of the proposals is to allow consumers to assess the main features of a product and make easy comparisons with a range of similar financial products to make informed decisions.
But we are mindful that this must be achieved without placing undue burdens on product issuers.
As disclosure is always a hotly contested issue, I anticipate a lot of discussion on these proposals.
As for the timetable, a consultation paper will soon be released which will elaborate on the reforms proposed in the CLERP 6 position paper.
Following consultation with industry and consumer groups, draft legislation will be prepared. That will be thrown open to consultation for a further three months.
On that timetable, I expect to be in a position to introduce legislation into Parliament before the end of the year.
I began this address by saying most people consider superannuation as a maze rather than a mardi gras.
As we seek to put in place the appropriate policy and regulatory framework, we hope to make it less of a maze to industry and consumers.
Our reforms of the financial services industry are paying dividends, reflected in the strength of Australias economy and financial sector.
They have simplified and streamlined regulations and reinforced the safety net for consumers.
The reform process is by no means complete. In the rapidly changing world of financial services, Governments must be ever-vigilant to international trends and prepared to implement the policies to take advantage of them.
The Howard Government has proven it is up to the challenge.
Above all, we recognise that we must negotiate the maze with those intimately involved in the financial services sector, pooling our knowledge and expertise to achieve the best, most balanced outcome.
I wish you well as you embark on your mardi gras of information.