Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Finance (Senator Cormann) to a question without notice asked by Senator Whish-Wilson today relating to the Financial System Inquiry.

I am going to read a quote:

We do have an inquiry into financial governance going on now. We want to get to the bottom of these things and we want to ensure that investors are as safe as they can be in a market economy.

Those are the exact words from the Prime Minister when asked whether the government would be making a decision on a royal commission into the Commonwealth Bank following a Senate inquiry. I think any reasonable person can deduce from that that he is saying that he will receive advice on that from his financial systems inquiry. My question to Senator Cormann was whether that was indeed the case. I have concerns that the head of that financial systems inquiry, David Murray, has a conflict of interest or, at the very least, a strong perceived conflict of interest, in relation to providing advice to the government on whether it should have a royal commission into the scandals at the Commonwealth Bank and, even broader, into white-collar crime.

I have nothing personal against Mr Murray. I have no doubt that he is very experienced and very well-qualified. But he was the CEO of the Commonwealth Bank until 2005, for a long period of time, when the bank aggressively moved into financial planning, when the bank removed external compliance controls—which came up in the Senate inquiries as one of the issues—and when the bank hired rogue financial planners, such as Mr Don Nguyen, which we heard about in the Senate inquiries. Mr Murray was a part of that bank and an important part of that culture and was a very successful CEO under lots of measures.

The Senate inquiry has very clearly shown that we need a royal commission. We need a substantial inquiry into this bank and into other activities going on and we can look to ASIC to enforceable undertakings. Where are they are occurring? They are occurring in places such as Macquarie Private Wealth. That is just the tip of the iceberg in my understanding. So I wrote to the Prime Minister and requested that he ask Mr Murray, whether permanently or temporarily, to step aside as chair of the financial services inquiry until this issue is resolved.

There have been other financial commentators on this, and I note that Senator Xenophon also commented in the media that, 'With all due respect to Mr Murray's background and qualifications, he is not the right person to be leading this inquiry'—particularly now when we are broadening the inquiry by looking at things, such as the future of financial advice reforms, the culture within the banking sector, the vertically integrated business models that Mr Murray was a part of driving—and this was not just in the Commonwealth Bank but also led to all the banks competing in the same area. I think a reasonable question to ask is: how likely is he to provide advice to the government that those types of business models—those business models that entrench conflicted remuneration—cause cultural problems in banks because they make so much money out of these areas? I do not think it is unreasonable to say that, if you are potentially going to be called as a witness to a future royal commission or you will be implicated in some way in that royal commission, you have a conflict of interest in terms of advising the government on whether you should even have a royal commission in the first place. It is very clear. So I have written to the Prime Minister and I have asked him to step Mr Murray aside and respond. I have not received a response and that is why I brought this up in question time today.

Clearly, the weakening of the FoFA laws, we have seen with the amendments, are causing significant concern amongst consumer groups in this country. I would like to say that the politics around this that somehow this is the banks versus the unions for super funds is wrong. I do not come from either of those backgrounds or perspectives to this inquiry; I come from the perspective of the consumer and looking at consumer protections. The government have not convinced these very large stakeholders that this is the right thing to do. The Greens said very clearly that we felt conflicted remuneration should be totally banned and that we would vote against the other FoFA amendments but we would be happy to see an independent inquiry after five years into whether it is true that red tape has increased costs to the smaller financial planners or whether the cost of the provision of financial advice has changed. It is reasonable to have an evidence-based approach to this; not kill these FoFA bills before they even hit and take effect.

The Australian Bankers Association made it very clear in the Senate inquiry that they expected these things to be changed by 1 July so that they did not have to change their compliance systems. Well, the government delivered for the big end of town and now the mum and dad investors across this country are worried and it has done damage to the financial services industry. (Time expired)

Question agreed to.