Jenny McAllister (NSW, Australian Labor Party, Shadow Cabinet Secretary) Share this | Hansard source

I rise to speak on the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 on behalf of the opposition. This bill implements three provisions of the government's response to the banking royal commission. It is worth noting that the Treasurer had promised to deliver all of the provisions included in this bill last year and we're still waiting for action on many other recommendations. Labor acknowledges that there may have been other worthy calls on the Treasury's time in the past six months, given the pandemic, but we also observe that this is a government that has taken a go-slow approach to almost every consumer-friendly reform. It is a government that has dragged its feet on every measure that would keep the banking sector accountable. COVID-19 appears to have been a very convenient excuse for the Treasurer to drag his feet on delivering on recommendations of the banking royal commission, and, unfortunately, this is consistent with a longstanding pattern of inaction. This is the government that voted 26 times against establishing a banking royal commission. It is a government that continues to play down any of the problems or risks for consumers in this sector.

The provisions of this bill are worthy changes to financial services law. Labor will support them. It is consistent with our commitment to implementing the recommendations of the royal commission properly. Schedule 1 provides for some enhancements to the framework governing the provision of financial advice to clients and ongoing fee arrangements in line with recommendation 2.1 of the Hayne royal commission. Schedule 2 sets out a new disclosure requirement for financial advisers. It ensures that any adviser who is not independent must provide written advice to their clients specifying how and why they are not independent and where their interests may conflict with those of their client. Schedule 3 sets out new requirements for advice fees being charged in superannuation, prohibiting ongoing fees being charged for most super accounts and preventing advice fees from being charged without express consent from the member.

Many of the people here will remember too well the cases exposed through the banking royal commission that led to the changes before us today. In perhaps the most notable of those, it became very clear that AMP knew that, in charging fees to clients for extended periods of time for services they knew they could not deliver and were not in a position to provide, their behaviour was both unethical and illegal. These were issues that were raised by junior staff within that institution and drawn to the attention of senior staff, and senior staff proceeded anyway—they did it anyway. It's for that reason that we're here today. The unethical and systematic exploitation of customers by financial service providers who charged hundreds of thousands of dollars in fees for services that were never provided absolutely undermined trust in our financial system, and it has undermined trust more generally at a time when our society needs trust more than ever. I hope these new laws do combat the sort of misconduct that led to Commissioner Hayne's findings. It is going to take more than this bill to rebuild trust in our financial system. It will require financial professionals themselves and financial services entities to commit to cleaning up their own industry and ensuring that customers really do come first. It will require a government and a Treasurer that are firmly committed to improving our financial system. Sadly, I think we lack this latter element.

The Liberal Party have never been fond of a financial system that serves Australia. They have always been first and foremost in favour of a financial system which serves the best interests of their mates in high-paying jobs in senior roles in banks. That is behind the 26 occasions when they voted against establishing the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. This is a group of people and a government that have never had a vision for financial services beyond what their mates tell them over a very long lunch.

You need only look at the other bill that was put forward by this government at the end of last year, which would have stripped responsible lending obligations from almost all consumer credit contracts. It goes directly against the first recommendation of the royal commission, which explicitly told the government not to fiddle with those obligations. Those obligations were put in place by Labor in 2009 to ensure that banks and lenders were obliged to make sure that credit products were not unsuitable for their customers, and that was to prevent the kind of behaviour that we saw in the global financial crisis. This is nothing less than a big free kick for the big banks, stripping away necessary protective legislation just to save a few bucks on paperwork.

The Morrison government did not ensure that the banking royal commission recommendations were implemented in full before the COVID crisis. They dragged their heels on that. But the Australian public rightly expect that the banking royal commission's recommendations will be implemented, not glossed over, not twisted, but actually implemented as intended.

As I mentioned at the beginning of my speech, the Treasurer has blamed the pandemic for his go-slow on bringing forward legislation for implementation. It's an excuse that is very convenient. The reality is that the COVID-19 pandemic has impacted on real people living and working in the real economy. They have lost their jobs, found themselves dependent on government assistance for the very first time in their lives and endured great uncertainty. The last thing that people need at a time like this, at a time of great uncertainty, is to be exposed to financial misconduct as well. The evidence presented to the banking royal commission demonstrated in volumes the devastating impact of financial misconduct on people who have done nothing wrong—people whose trust has been abused by individuals and institutions who too often got away with unscrupulous, unethical and illegal practice. The government cannot continually delay and distort important and essential reforms. I commend the bill to the Senate.