Daniel Mulino (Fraser, Australian Labor Party) Share this | Hansard source

I think it's worth going back to the royal commission that has motivated the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 and so much reform in this space. I will delve into the detail of the problems that have arisen in relation to the assertion that there might be an exemption given for travel insurance and the importance of this particular amendment being suggested by the member for Kingsford Smith. But I think it's worth remembering that this royal commission was resisted by the government and they voted against it 26 times. It should be no surprise that we on this side of the House and many representing consumers' interests in the industry and in the community are looking at any bill brought forward by this government with a great deal of interest and, indeed, scepticism. The devil, as the previous speaker on this side of the House said, is in the detail, and it is absolutely imperative that we get the devil right.

The royal commission which, as I said, was resisted 26 times by those opposite, highlighted, to the rightful horror of the community, a number of practices that were outrageous. We saw a number of people in the community lose their life savings. We saw a number of people in the community dealt with in a way that was highly inappropriate—cold calling, selling people products that weren't fit for purpose or charging people fees for no service. That shocked the community, and the community rightly expected that this government would follow through on the recommendations of the royal commission. As an aside, I will say it is also shocking that this government is in the process of walking away from the very first of the royal commission's recommendations in relation to responsible lending. This government has shown a willingness to delay and water down recommendations in far too many instances.

What we see in relation to this particular bill and the much-needed amendment that has been proposed by the member for Kingsford Smith is that, in relation to the proposed industry-wide deferred sales model for add-on insurance products, it would be entirely inappropriate for the minister to grant a blanket exemption for travel insurance, based upon what we saw at the royal commission and based upon what we know about the potential for consumer abuse. Fifteen recommendations relating to the insurance sector arose from the royal commission. There were recommendations in relation to commissions, codes of practice and claims handling, but one of the important recommendations was in relation to the ways in which insurance companies and other financial service companies interact with consumers. Consumers should not be exposed to purchasing add-on products without a cooling-off period.

The royal commission highlighted that a number of these products often represent poor value for consumers and are often sold using pressure-selling tactics. During the royal commission, many of us would remember hearing testimony from people who were essentially abused by being pressured to buy products. Many of us would have read transcripts of telephone conversations. It's exactly those situations that we need to bear in mind when determining the appropriate way to regulate these kinds of transactions.

As I indicated, it is entirely inappropriate for there to be a blanket exemption for travel insurance, given the scope for inappropriate pressure sales to arise in that context. I should stress that the recommendation arising from the royal commission in relation to this matter has been strongly supported by consumer advocate bodies, by CHOICE, by financial advisers and by representative bodies. This is an important recommendation to get right. If we look at the amendment that has been proposed by the member for Kingsford Smith, it is that, before making regulations for the purposes of granting an exemption, the minister must be satisfied that the class of add-on insurance products has historically been good value.

What reason can the government have for not accepting a recommendation that, in the context of this situation, where there is the potential for abuse and where there is the potential for aggressive selling, the minister must be satisfied these add-on products represent good value? There is no reason. I strongly recommend that this House pass this amendment—an important amendment—in the spirit of the royal commission's recommendations.

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