Ed Husic (Chifley, Australian Labor Party) Share this | Hansard source

There are two central ingredients in our financial system. One is obvious, and the other one Labor recognises as equally important. Obviously the first one is money, but the other necessary, vital ingredient is trust. Australians should be able to trust their financial system and know when they save, invest or seek help that they're dealing with institutions that will act with integrity. I know that there's a bit of a trend at the moment. We're going through our normal cycle of focusing on red tape and reducing regulation. I understand that we have to go through these phases, and we'll go through it, no doubt. But, when it comes to the financial system, regulations are there for a very important reason—the reasons I mentioned before, not the least of which is to underscore, reinforce and support trust in the system.

The Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025, as my colleagues have reflected, covers a number of areas that will be of great interest to Australians, but one of the big areas in here will be around improving the frequency of assessments of how our regulators are performing and supporting their work in maintaining that trust, that vital ingredient that I mentioned earlier, specifically delivering more comprehensive reviews of the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority. This will help deliver more considered recommendations that are impossible under their current review cycle. It's designed to improve the effectiveness of our financial system regulations. It is exceptionally important.

Trust itself, in our financial system, isn't a given; it's got to be earned, and it's got to be continually protected. I have to say that, like many people in the public, I was simply staggered to see ANZ fined a record $240 million in penalties after admitting to widespread long-standing misconduct that affected tens of thousands of Australians. This was the largest penalty that ASIC had ever sought against a company—the largest ever. Why? It was because ANZ, one of the big four banks, misled the Commonwealth on a $14 billion bond deal, overstating bond trading volumes by tens of billions of dollars. It failed to respond to hundreds of customer hardship notices. It underpaid interest to tens of thousands of customers. It charged fees to the deceased while ignoring grieving families trying to settle estates.

This isn't a one-off. ASIC has—and this is, again, just as staggering—taken action against ANZ nearly a dozen times in the decade. This points to systemic misconduct. Even more importantly, it's happening against the backdrop of a 2019 royal commission into the banking system that was designed to weed out this type of misconduct and, equally, to improve governance—exceptionally important. When you look at ANZ's performance, given the things that I've just mentioned to the House, it seems like ANZ is not getting the message. If they can't get the message after a royal commission, then sterner, harder action needs to be followed up until they do get it.

I think it's important for the House to understand why ANZ was the target of the biggest fine that has been levied against a company. Let me read into Hansard, based on information released by ASIC, what happened. They were accused of 'unconscionable conduct when managing a $14 billion government bond deal and inaccurate reporting of secondary market bond turnover'. The ASIC media release reads:

On 19 April 2023, ANZ was assisting the Government's sovereign debt management agency, the Australian Office of Financial Management (AOFM), to help deliver a $14 billion bond issuance.

Instead of trading gradually throughout the day to limit market impact, ANZ sold a significant volume of 10-year Australian bond futures around the time of pricing which placed undue downward price pressure on the bond price. ANZ knew—

according to ASIC—

its trading could expose its client to significant risk of harm, but did not disclose to its client that ANZ still had significant volumes to sell before pricing nor provide its client an opportunity to consult with ANZ about delaying pricing.

This is extraordinary behaviour. The release continues:

This denied the Government an opportunity to protect itself and the public interest—

when it came to $14 billion worth of bonds—

The Government was relying on ANZ's expertise and professionalism. When the Government later asked what happened—

this is equally damning—

ANZ's reports were misleading or deceptive.

The point I would make about this is that, if ANZ did not even blink to do this to the Commonwealth, imagine how they are treating mum and dad consumers. If they are prepared to mislead the Commonwealth and do what they did, what else are they doing in terms of impacting on the security and the interests of mum-and-dad consumers? This is critically important.

It's also worth noting just the number of times that this bank, ANZ, has been found to engage in misconduct. Again, with the indulgence of the House, I will read this into Hansard:

over 150,000—

contraventions of the ASIC Act, Corporations Act and Credit Act for failing to provide promised benefits to customers with offset transaction accounts or under a 'Breakfree' package over 20 years …

We had a banking royal commission. This type of behaviour was supposed to be weeded out. We clearly have a bank, in ANZ, that has not picked up the message. As I indicated to the House earlier, if ANZ is prepared to deceive the Commonwealth on bond issuance, you can see what it's prepared to do to other people, based on some of the contraventions I just read into Hansard, which have genuinely affected mum-and-dad and other regular customers as well.

I congratulate ASIC, most definitely, on the fact they've taken this stand. It is really important not just that our regulators have the teeth but that they use them, and they did. But if anything, with the greatest of respect and regard to ASIC, while I do acknowledge the scale of the penalty that has been imposed, given the rap sheet for ANZ it would certainly be within their ability to go even harder than the $240 million. I'm not alone in thinking this. Jeannie Paterson, professor of law in consumer protection at the University of Melbourne, said that, while the $240 million is the largest penalty ever sought, the amount that actually can be imposed on financial institutions for contraventions of financial services law is way higher. So, while $240 million is big, it could and should have been bigger. Professor Paterson said:

Under provisions in place from 2019, the civil penalty could have been set at 10% of ANZ's annual turnover, currently capped at $825 million per contravention.

One point of comparison is the $125 million penalty ordered against Volkswagen in 2019 for misleading consumers about emissions (and later upheld on appeal). Notably, this was one contravention, not four as the case with the ANZ.

ANZ agreed to the penalty because they would rather do that than fight this in court and be further exposed for their poor governance behaviour and framework. But certainly we do need to take a harder line. In particular, where ASIC has the ability to pursue tougher penalties against banks, it should.

It's often said that the big four are too big to fail. But they can't be too big to be fined, and they should be fined hard where they breach trust. As I said, it's absolutely critical that people have trust in our financial system and that they have faith in the way the regulators pursue breaches of trust. This legislation will be an important step in giving further strength and improving the efficiency of our financial regulations. But if the behaviour of ANZ post the banking royal commission is anything to go by, and the number of contraventions and the fact that it secured the biggest corporate fine, then we need to go harder to protect trust in the financial system, and I'd certainly urge ASIC to do so.

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