Tuesday, 12 February 2019
Matters of Public Importance
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
I acknowledge the banking victims in the gallery. My early life was defined by being a victim of one of the big four when my family, in the very early eighties, was encouraged to borrow overseas in unhedged Swiss francs and of course, when the spread increased, our family lost everything. We ended up settling with the bank literally on the top stair of the courthouse. Wacka Williams, my colleague in the Senate, was bankrupted by the same thing. So your pain is well felt. My young life was defined by this. So, as a government, we are not blind to what you've been through. I am not blind to what you've been through. The conduct of the financial institutions that should have known better was deplorable. They have let Australians down for decades. Go and have a beer with Wacka Williams in the Senate to get his view of some of the conduct of banks. After the post-GFC banking inquiries 10 years ago, Wacka and I worked with the then Labor government of the day on looking at reforms to this. In fact, the parliamentary inquiry into financial services, the Ripoll inquiry, had, I think, 11 recommendations on which we on the committee agreed with the government of the day, because it was that important. So my message to you as Assistant Treasurer is: we hear your pain, we understand it, and we are committed to doing something about it. Yes, there are politics of the day, and I understand that, but please, from me, don't underestimate our sense of compassion and what we want to do to try to help you.
It was a bruising royal commission: 68 days and 130 witnesses. I gather many of you were witnesses. Many of you were not able to be witnesses, but Hayne has given his assurance—and I think he is a fair man of integrity—that everyone's story was read and heard and listened to, and the report is comprehensive. It was a forensic inquiry into our financial system. The opposition has made it clear, through the shadow minister opposite, that Labor will implement all 76 recommendations, and the government has made it clear that we will act on all 76 recommendations. There is no question—you heard, and there is no question—that the government of the day, this government, will act, and we are seeking to act as quickly as possible. But it's important to also understand that we have acted. We haven't sat by as the commission unfolded. We recognised many of the faults that needed to be fixed. I was quite visceral on many of the faults that I wanted fixed.
So we've been acting, and some of the things this government has done are impressive. They would have helped me out. It's important, I think, that we understand some of the key things that we have done as a government, because we haven't been flat-footed. This is not a government that doesn't care. I understand the politics of trying to frame it like that, but nothing could be further from the truth. Go and spend some time with Wacka Williams. Speak to a senator sold up by a bank, bankrupted and tossed from his land, and you will hear the heartbeat of a bloke who does care, as do I and as does the human services minister next to me, who oversees Centrelink and sees the pain of hundreds of thousands of Australians who use those services and move through it.
It's why we moved to act on the Australian Financial Complaints Authority. It's why we've been working with Helen Coonan, the chair, for a scheme of last resort. We were working on it for months with Helen prior to the royal commission announcing. We're looking to better protect consumers. We've already banned excessive credit card surcharges. We've simplified calculation of credit card interest. We've banned unsolicited offers of credit card limit increases. We've established the Banking Executive Accountability Regime, which is a serious regime for banking executives so that they can't say to my family or to yours that borrowing overseas is secure when it's unhedged and can't sell you a product with guarantees that don't exist. But, if those things happen, there are penalties that involve jail time for executives.
We've established the Financial Adviser Standards and Ethics Authority. We've appointed second deputy commissioners to ASIC and APRA. We've required of administrators that significant financial benchmarks, including the bank bill swap rate, be licensed. We've made manipulations of any financial benchmarks a criminal and civil offence. We've increased APRA's powers over non-bank lenders and increased APRA's powers in the event of crisis. We've introduced industry funding for ASIC. We've removed ASIC employees from the Public Service Act so that they can employ the best possible people they need. We're now in the process of enhancing ASIC's ability to ban individuals and strengthening their ability to refuse and cancel licences. We're boosting criminal and civil penalties for misconduct, in some cases by 10 times 1,000 per cent. We're strengthening whistleblower protection, and this week we'll be introducing from the Senate the whistleblower regime—literally a world first in this space—and I'll be bringing forward on Thursday a raft of legislation concerning director identification numbers and combining 35 registers of business information into one to get greater transparency on this issue of who directors are, what they are doing and where they are going.
We've strengthened regulation of super funds, and there's more to do in the Senate. We're lifting governance standards for super funds. We're seeking to reunite people with their lost super accounts—and there's a lot of lost super; I'm talking billions and billions and billions of lost super that needs to be reunited with people. We're banning exit fees on super accounts, capping fees on low-balance superannuation accounts and extending unfair contract term protections for insurance. We're removing restrictions on choice of super funds, improving explanations of insurance products and imposing design and distribution obligations on financial products so that products cannot be sold to individuals like you and me that are not appropriate for us. To stop that poor advice, we're empowering ASIC to modify or ban harmful financial products.
These are things that we've already been doing. There's nothing new here. I haven't even got to us acting on the 76 recommendations of the royal commission. This is everything we've been doing to sort out some of this financial mess, because we care and we get it—we do. It's important to us. The action we're now taking on those 76 recommendations is substantial. In terms of the scheme of last resort with AFCA, that will go back 10 years, consistent with the period examined by the royal commission. We're compensating those individuals who have prior unpaid determinations in their favour by the predecessor bodies of AFCA, which will see almost 300 consumers finally receiving compensation totalling around $30 million as a consequence of prior misconduct.
We'll extend the jurisdiction of the Federal Court to cover corporate criminal misconduct, which will expedite cases that are considered by state courts and commonly take over two years to be heard. We're commencing a capability review of APRA, which will be led by Graeme Samuel AC, and conducting further capability reviews every four years. Commissioner Hayne's recommendations and the government's response advance consumers in four key ways. They will strengthen and expand protections for consumers, small business and rural and remote communities. They will raise accountability in governance standards that are fundamental to ensuring that we as consumers get the advice we need. They will enhance the effectiveness of regulators and provide for remedies for those harmed by misconduct.
The government gets it. We've heard the voices of those who have been affected. We have sought to act over the past few years in terms of progressively working to ensure a far better financial system. Do not be disavowed that this government does not hear you—it does; we get it. We get it personally, we get it collectively, and as a government we always have.