Wednesday, 26 May 2021
Financial Regulator Assessment Authority Bill 2021, Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021; Second Reading
Before the debate on the Financial Regulator Assessment Authority Bill 2021 and the Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 was adjourned, I was talking about the impact of the royal commission and how that has led to the bills before the House today. I'd also like to take this opportunity, before I continue with my remarks, to formally move the second reading amendment which has been circulated in my name. I move:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House notes that the Government has taken too long to address misconduct in the financial sector, particularly in response to the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry".
When the banking royal commission formally broke through the Prime Minister's web of spin and deception, it revealed that David Murray's warnings about the need for a regulatory oversight body were spot on. It revealed, in the case of ASIC and APRA, corporate cops that were hesitant to enforce the law—regulators who were aiming to achieve compliance through negotiation and persuasion rather than through the strict letter of the law. Litigation was the last resort, not something that was considered as a first resort. A cosy culture prone to capture by the banks, the insurers, the superannuation funds and the regulator community was put ahead of the interests of those whom the laws were intended to protect. This culture enabled much of the misconduct that the banking royal commission revealed: fees for no service, charging dead people fees for products, selling vulnerable people products that they couldn't afford and didn't need, conflicts of interest that were never disclosed and a system of remuneration that encouraged rorts and rip-offs.
As we debate this bill today, we ask members to ask themselves some simple questions: How many Australian families have suffered in the eight years since David Murray made that recommendation—a recommendation that was ignored—to government? How many years have passed since he first rang the alarm bells about the culture and the potential for culture in ASIC and APRA? How many farmers were forced off their land while the government dithered and dallied? How many families have been forced into financial hardship as a result? How many parents struggled to provide for their children while the bank took more and more out of their pay cheques? How many elderly Australians were consigned to poverty, losing their life savings to dodgy schemes that should never have been sold to them? Ten thousand Australians made a submission to the banking royal commission. That's 10,000 Australians whose lives were impacted, but we know the number is much more than that.
The Financial Regulator Assessment Authority that this legislation will establish should have been established eight years ago. It will bring extra scrutiny and accountability to our financial regulators. It will serve as an early warning system for any government with an interest in effective regulation. It will keep the financial cops on the beat honest. These are necessary and valuable steps. However, there remains reason for concern. The royal commission shone a spotlight on the culture that existed within the regulator of client service, of stakeholder management, a culture that had emerged over many years, a culture where the regulator community failed to fear the regulators. This culture thrives when the regulator community believes that it will have a political backstop here in Canberra, and it's quite clear that the banks, the superannuation funds, the insurers, the financial advisors—the bad ones—had every reason to believe that this was true. Scott Morrison himself, as Treasurer, and the Morrison government voted 27 times. They gave the banks, the insurers and the super funds every reason to believe that they had a political protector here in Canberra. They argued against the need and they neglected its oversight. So it is little surprise at all that the regulators, taking a signal from the government, adopted the culture that was exposed by the royal commission.
We have reason to be concerned that a culture that was exposed and saw a reaction from the regulators in the immediate aftermath of the royal commission is falling back to that bad old days that were exposed by the royal commission. Evidence abounds—the government's jawboning of ASIC, for example, with the responsible lending laws and its proposition to remove responsibility for responsible lending laws from ASIC and transfer it to APRA, a completely inappropriate regulator for this particular part of the law.
There was the failure to prosecute, the failure to ensure rectification of all of the reported breaches between 2013 and 2018 and the failure of the oversight committees to do anything about it. I want to point out the Standing Committee on Economics and the House PJC committee as sterling examples of this, and we have every reason to believe that that culture continues. Under the chairmanship of the member for Goldstein, as an example, the Economics Committee has neglected its statutory responsibility and has—
Mr Tim Wilson interjecting—