Senate debates

Wednesday, 6 December 2017


Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) Bill 2017; Second Reading

10:13 am

Photo of Chris KetterChris Ketter (Queensland, Australian Labor Party) Share this | | Hansard source

My contribution in relation to the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 revolves very much around the fact that the proposition is to abolish the Superannuation Complaints Tribunal and absorb it into this new Australian Financial Complaints Authority. Whilst the opposition doesn't have concerns about the ombudsman services being combined, as I have previously indicated, we do have major concerns about the changes to the Superannuation Complaints Tribunal.

Some of these concerns were raised by Helen Davis, the chair of the Superannuation Complaints Tribunal, during the committee's inquiry, and I thank her for her contribution. I would like to also say that this lends support to the Labor view that the tribunal should continue to stand alone. The CPSU's submission to the committee's inquiry is also very informative. They pointed to the fact that the proposed scheme will reduce consumer protections and rights in relation to superannuation matters. They also indicated that the focus of the SCT does not address the widespread community concerns about the operations of the financial services sector. They make the very cogent point that radical changes are being proposed for the superannuation industry, which has not seen anything close to the litany of scandals that have beset the finance sector. In other submissions to the committee's inquiry, I note a number of other reservations to the changes being made.

In closing, I would like to thank Senator Gallagher for her work in this area. Obviously, her highly principled actions this morning speak volumes for her integrity. I also know that Senator Gallagher is passionate about the need for the Superannuation Complaints Tribunal to continue with its functions, as am I. I also thank Senator McAllister, who acted as deputy chair of the committee for a time. We believe that the integrity of our super system is too valuable to risk and we do not support the weakening of this body.

10:16 am

Photo of Fraser AnningFraser Anning (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

This is not my first speech. I rise to speak to the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017. The bill amends the Corporations Act to establish a new dispute resolution body, the Australian Financial Complaints Authority, to ensure that consumers and small businesses have access to free, fast and binding dispute resolution. The bill comes on the back of the Ramsay review of 2016, which recommends that significant reform is needed in the disputes resolution process. It also implements the recommendation of the Carnell report to establish a small business disputes resolution one-stop-shop to hear credit disputes for amounts up to $5 million. The AFCA will replace the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal, but it will have additional statutory powers.

The Australian Securities and Investments Commission, ASIC, will be responsible for ensuring that AFCA meets the standards set out in the legislation. The bill will provide ASIC with the ability to set regulatory requirements that AFCA must meet, and the power to compel AFCA to comply with the standards set out in the legislation. Under the AFCA, consumers and small businesses will be able to have their disputes with financial firms heard and determined by AFCA, at no cost. Under the current system, it is difficult to achieve comparable outcomes for customers with similar complaints, because different bodies handle the complaints.

In his second reading speech, the minister stated that the bill forms part of the government's broader commitment to ensuring that banks and other financial institutions are held to account when they fail to meet community expectations. Insofar as this bill does this, I applaud the government's efforts and support this legislation. My only concern is that the role of AFCA may be too limited, particularly in the size of debts that may be considered. Many farmers with debts exceeding $5 million find themselves in trouble with ruthless banks, and I am concerned that they will not be able to access the benefits of this new complaints authority, or that its rulings may be not be sufficiently strong to overcome the vested power of usury. I, and many colleagues from the bush, have heard hundreds of heart-rending stories of how family farms have been stolen by deceptive and amoral lenders. Rural borrowers have faced unconscionable treatment by banks, which have tricked them into overdrafts, based on phoney, inflated valuations, only to have those same farms seized when lenders subsequently revalued the property in order to create an unsustainable debt-to-equity ratio. We have heard of numerous cases where banks sought to foreclose on properties on which repayments were fully paid up to date, claiming so-called 'anticipatory breaches', using fictitious future projections of reduced income.

If these same lending practices were extended to big-city home borrowers, hundreds of thousands of families who are fully up to date on mortgages would lose their homes and there would be rioting in the streets. It is only the fact that the farmers who are victims of usury are in remote locations and small in number that their hardship and misery are hidden from the wider population. This is along with the waves of suicides that follow the loss of properties that have been in families for generations.

Because of my concern to ensure that this bill does, effectively, help rural borrowers in these dire straits, I will be supporting the government's amendment that calls for a review of AFCA 18 months after it's established. This amendment will require the minister to commission an independent review of the effectiveness of the AFCA scheme regarding rural debts. The aim of this review will be to consider the limit on the value of claims established by the bill and to consider the effectiveness and fairness of remedies provided by the authority once it commences operation, particularly considering feedback from complainants. Since a proposal for an 18-month review of the effectiveness of this authority is entirely consistent with the stated intent of this bill, I strongly encourage all senators to support the government's amendment.

10:21 am

Photo of Catryna BilykCatryna Bilyk (Tasmania, Australian Labor Party) Share this | | Hansard source

The bill we're debating today, the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017, arises from the Turnbull government's policy to set up a one-stop shop for consumers' complaints about financial services. In doing so, the bill combines three existing external dispute resolution schemes, the Financial Ombudsman Service, FOS; the Credit and Investments Ombudsman, CIO; and the Superannuation Complaints Tribunal, SCT. The new body will be known as the Australian Financial Complaints Authority, AFCA. For the FOS and CIO, this is simply a merging and rebranding of the two existing services.

We, of course, welcome higher monetary thresholds for disputes that can be heard. But the government is not proposing any new or additional powers that the existing dispute resolution bodies don't already have. The bill also purports to copy the powers of the SCT into the AFCA. However, as the AFCA will be a private company limited by guarantee, this bill will result in reduced consumer protections for superannuation disputes. The chair of the Superannuation Complaints Tribunal, Helen Davis, said:

I don't think it would be true to say, in relation to super, that it's a rebranding exercise. Arguably, it's quite a significant change for superannuation, specifically in terms of the external dispute resolution. It goes from a statutory body to a non-statutory body. It moved from a specialist body to a one-stop-shop body.

There are many important differences between the SCT and the proposed AFCA that stakeholders say will result in reduced protections. Their bill does not retain appeal rights that are currently available for the administrative decisions of the SCT. The SCT has the power to require information shared at the initial review stage to be kept confidential, which can include highly sensitive personal information. The SCT has an explicit statutory power to cancel the membership of a life policy fund if it finds the conduct relating to the selling of that fund was unfair or unreasonable. There is no limit on the value of the claim that the SCT is allowed to hear and, as a private body, the AFCA is not subject to freedom-of-information claims.

The government claims its reason for shutting down the SCT is due to delays in its resolution of complaints, but this is somewhat hypocritical when the delays have clearly been caused by the funding and staff cuts, at the SCT, inflicted by this government. Another good argument to retain the SCT is that it is a specialist body with skilled and professional staff. Superannuation can be a very complex area, requiring specialists and technical skills. While there is a significant overlap in the types of complaints received by the FOS and the CIO, this is not true of the complaints dealt with by these bodies and the SCT.

To back up my comments about the retention of the SCT as a separate body, I refer to the additional comments of Labor senators submitted to the Senate inquiry into this bill. As well as outlining the arguments I just mentioned, Labor senators said:

No persuasive evidence was received during this inquiry that demonstrated that the SCT's arrangement was unsuitable, apart from its funding level.

So, I've yet to hear a persuasive argument from those opposite about why the SCT should not be retained in its present form, albeit with the funding cuts reversed, so it can deal with the current backlog of complaints.

Labor does not support the abolition of the SCT, and we will be moving an amendment to this bill to retain the SCT as a separate statutory body. Should Labor's amendments to retain the SCT be supported, we are left with a bill that, as I said, will essentially be a rebranding exercise. It is certainly no substitute for re-election on addressing the poor conduct of the banks. It is no substitute for the royal commission, for which Labor has been calling for 18 months and which this government has now belatedly announced. And, while the government claimed to be taking action to address the numerous examples of inappropriate financial advice, insurance claims that are unfairly declined, loan fraud, irresponsible lending and cover-ups, more stories continue to emerge from victims and whistleblowers even now. I'm sure every member and senator in this place would have at least one story, if not several, of a constituent who has fallen victim to misconduct by banks or financial institutions.

Let me tell you just one of my stories. This is a story about a Tasmanian couple who approached my office for help. Rather than use their real names, I'll call them John and Mary. John and Mary applied for a loan through a mortgage lender. When the lender met with them at their home, he appeared to be in a hurry and did not ask for any financial details. He just sought personal details such as names, dates of birth and driver's licence numbers. When John and Mary asked the lender about including their financial details on the form they were told that they would fill in the rest later. A few years after being granted the loan, they obtained copies of their application forms, only to find their financial information had been completely manufactured. The application stated that the couple owned a small business and also showed that they were both drawing an income from the business. John and Mary had actually stopped working in the business four years prior, when the business they leased was sold. Even when the business had been performing well, they had only ever drawn half the salary that was reported on their form. The application form also significantly overinflated the equity in their business. In total, John and Mary counted 78 fabricated facts that were added to the forms without their consent or knowledge after their signatures were obtained.

This is a clear breach of the Code of Banking Practice, which provides that:

Before we offer or give you a credit facility (or increase an existing credit facility), we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay it.

John and Mary lodged a complaint with the Financial Ombudsman Service, but their complaint was dismissed. Without the protection of the FOS their only option was to seek legal redress. But as low-income earners—one doing casual work and another one on a pension—they could not afford a lawyer. As for legal aid, John recently told my office, 'No legal aid lawyer in their right mind would take on the banks.'

The mortgage lending industry may claim that the issues faced by victims like John and Mary have been addressed by the industry, and this is something we're continually told by the financial services industry. But time and time again, new claims arise. The Australian reported just last week that the Australian Securities and Investments Commission, or ASIC, is investigating several large and small lenders for fabrication of documents. The week before that, National Australia Bank sacked 20 bankers and disciplined a further 32 after it was discovered that false information had been used in around 2,300 loan applications.

Loan fraud is just one of many examples of misconduct in the industry. As Labor has said time and time again—for month after month, in fact—we need a royal commission to get to the bottom of the rorts and rip-offs and to restore confidence in Australia's financial services industry. I find it incredible that Mr Turnbull and his government would spend 18 months fighting a royal commission only to do one of the biggest backflips we have ever seen and capitulate now. They rejected Labor's call for a royal commission and they rejected the call of families and small businesses who had been hurt by the bank's bad behaviour. They even refused to call a royal commission despite the numerous reports of whistleblowers. But when the banks themselves wrote to Mr Turnbull and accepted the need for a royal commission, it took him one day to finally fold. Mr Turnbull waiting on permission from the banks to call a royal commission is like saying he needs a note from his mum—and I don't mean in the Senator Canavan way.

The banks' letter to the government make for interesting reading. Here are a few extracts from that letter. In three instances, the banks refer to the need to act:

… it is now imperative for the Australian Government to act decisively to deliver certainty to Australia’s financial services sector.

…   …   …

… it is now in the national interest for the political uncertainty to end …

…   …   …

We now ask you and your government to act to ensure a properly constituted inquiry into the financial services sector is established to put an end to the uncertainty …

I think all of those comments can be read as, 'We know an inquiry is inevitable, so we give you permission to get on with it, get it over with and get it done with.' In their letter, the banks' CEOs also said:

In our view, a properly constituted inquiry must have several significant characteristics.

In other words, 'Let us explain to you how we want this thing to be run.'

The letter said:

Its terms of reference should be thoughtfully drafted and free of political influence.

In other words, 'Give us a call. We'll tell you what we want the terms of reference to be and then you can draft it.'

Another quote is:

It is also important that any inquiry reports back in a timely manner so that we can have certainty about the findings and move forward to implement any recommendations.

Once again they're saying, 'Let's get this over and done with ASAP.'

Was the banks' call for a royal commission, and this government's acceptance of that call, done in the spirit of public interest? I think not. It's as clear as day to every Australian that the banks and the government saw the writing on the wall. They knew the pressure was on, they knew the pressure was growing and they knew that an inquiry was inevitable. Rather than accepting the need for a royal commission, after months of holding out against public pressure and pressure from the Labor Party, this government has been dragged kicking and screaming to this new position. It was a backflip of epic proportions, one that would impress an Olympic gymnast. Only on Tuesday of last week, Mr Turnbull was still insisting that his government would not call a royal commission. Two days later, he was announcing one. I think Senator O'Sullivan's comment that the Prime Minister had been dragged to the table is quite apt. In fact, my earlier description of him being dragged kicking and screaming is not that original; it's the same description used by Mr Christensen, a member of the coalition's own backbench, to describe what has recently transpired. And just to show what an extraordinary backflip this was, let's examine what the government had to say about a royal commission previously. Mr Turnbull said:

The only beneficiaries from a royal commission would be, frankly, the legal profession.

He also described a royal commission as something that would go on for years, cost hundreds of millions of dollars and not tell us anything new. Mr Turnbull's Treasurer, Mr Morrison, described Labor's calls for a royal commission as 'a cynical political exercise' which sought to cynically exploit people's genuine concerns and politicise their pain. Mr Morrison also described it as a 'crass populist approach' to the issue.

After such a humiliating backflip, this government will no doubt be choking on their words. This is clearly another desperate tactic by this Prime Minister to hold on to his leadership. It's an attempt to hold off a backbench revolt, just like Mr Turnbull's decision to cancel a week of sitting of the House of Representatives was. Whichever way this government tries to spin it, these decisions are about Mr Turnbull's political interests, not Australia's national interest.

If Mr Turnbull were a decisive leader, a leader who was governing in the national interest, he would not be lurching from crisis to crisis. He would not be belatedly bowing to public pressure. Instead, he would have called a royal commission months or even years ago, and the commission could have handed down its report by now. We could be debating and implementing the recommendations right now if he'd called it even 18 months ago. A royal commission into the banks is in the national interest, but the national interest is not what Mr Turnbull and his government are motivated by. While we welcome this announcement, we would prefer it be done for the right reasons. Let's hope it's not a token exercise, which is what it appears to be, given the rushed manner in which it has been announced.

We know from evidence recently given by ASIC's deputy president, Peter Kell, that the government did not consult ASIC on their decision to launch a royal commission or on the terms of reference. We also know, from groups representing the victims of banking scandals, that the victims weren't consulted either. The government certainly didn't consult with the opposition. We'll just have to wait and see how effective this inquiry is, because we know the terms of reference could be much stronger.

It's cold comfort to the victims of many banking scandals over the years that the government have finally called a royal commission not because they thought it was actually necessary but because their mates in the banks told them to do it. One of the clauses in the terms of reference provides that the royal commission is not required to inquire into 'macro-prudential policy, regulation or oversight'. This basically means it will not be looking at whether the regulatory framework for our financial system is effective and up to date. It also appears that the government, in a partisan fashion, is using this royal commission as a cynical opportunity to attack industry superannuation funds.

The lack of consultation over the terms of reference is disappointing. We on this side will be doing our best to improve them. Labor is working with the government to ensure we have a royal commission that has real teeth, one that can provide some comfort and confidence for the millions of Australians who rely on banks to take care of their borrowings and savings. We certainly want a stronger response to misconduct in the financial services industry, something stronger than just the rebranding exercise in this bill.

There are a few positives in this bill, such as the lifting of the threshold for disputes that can be heard, removing the competition between the FOS and the CIO for the membership of financial services firms, and additional oversight powers for ASIC. However, I refer to my earlier arguments and I once again emphasise that the Superannuation Complaints Tribunal should be retained in its present form. As such, I urge all senators to support Labor's amendments when they come to the Senate.

10:37 am

Photo of Cory BernardiCory Bernardi (SA, Australian Conservatives) Share this | | Hansard source

From the outset, may I express my reservations about the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017. This is another attempt by the government—like governments of all persuasions—to appear to be doing something meaningful to address a substantive problem that they've tried to avoid addressing for a very long time. In this case, it dates back to Mr Hockey. When he was Treasurer in 2013, he had the Financial System Inquiry. It reported in 2014. Then we had the Ramsay review, commissioned in 2016, into the complaints framework in financial services. That report was released on 9 May of this year. Both of those inquiries were designed to avoid a royal commission into the banking and financial sector, and they've gestated and given birth to the bill that we see before us now.

I've never been a supporter of a royal commission into banks. I believe—and I said this to some senior banking executives—there was a degree of inevitability about it because of what the National Party was doing, with the support of the Greens, the Labor Party and others. That doesn't mean that I fully support it, but it will be coming into being now, with the government having initiated it. The terms of reference may not satisfy some in the building, but at least the royal commission will provide a complete ventilation of many of the issues that people have been talking about, including the Financial Complaints Authority. That's why my advice to the government, for what it is worth, is that they shouldn't be proceeding with this bill. This is front running that was designed to avoid a royal commission and an inquiry into the financial services sector, but principally the banks. They now have that and, yet, they're still proceeding with this bill. It's not saving a substantial amount of money, it's not reducing bureaucracy. In actual fact, I think what it's going to do is create an environment where people will be treated differently according to how their advice was received.

Currently, within the financial services framework, there is a huge difference between a bank wealth management arm, for example, with all the billions of dollars' worth of resources available to it—and the inherent conflicts of interest that also go with that, I must say—to an independently owned financial planning arm, a licensee of a broader financial services licence holder, a truly independent fee-only adviser versus your suburban accountant who might be providing some advice on self-managed superannuation funds, or they might have a specialist financial planner in there. They're different entities. The people accessing them have different expectations. As a result, I believe that those individual entities should have the right to choose a complaints mechanism that will work for them, that is going to be responsive and understanding of the different applications that go right through the financial services sector, rather than merging entities into one that is essentially going to be operating for the big corporates. That's the conclusion that I've drawn—it will be operating for the big banks, it will be mired in bureaucracy, it will force a compliance regime almost that will make the independently owned financial planner or the smaller shop almost unviable.

Choice in complaints resolution is critical, in my view. Not only does it foster competition and more responsiveness but it will, I think, keep costs down. And let's make no mistake about this. The cost of compliance when you're providing advice to clients or providing any services associated with money means it's becoming almost prohibitive to provide specialised or personalised financial advice to the smaller mum-and-dad investor, if I can put it like that. For the person that is starting out and accumulating a nest egg, saying, 'Well, I'd like some financial planning advice,' it's not viable. It's not viable for them to access personalised financial planning advice, because the compliance is enormous.

I understand that this compliance has grown over the course of time because of rogue advisers, dishonest acts and the fact that, wherever there is a pool of money, you will find rogues and sharks attracted to it. That is simply the way. But legislating for the aberrations is wrong. I think what is much more important is: where something has been done incorrectly, where criminal activity has taken place, that that be pursued to the full extent of the law, not that you should have to cause people to fill in 150 pages of documents before they can access it. Where rogues exist, kick them out of the industry. Ensure that clients are compensated. But the best way you can do it is to make it crystal clear what people are signing up to—and say, 'This is what we're putting you into. This is the fee that's going to be attached to it. This is the service you can expect'—and not hide it at the back of the fat bit of puffery in the client forms. Put it front and centre, explain it to them, get them to initial every particular point and get them to understand the risks attached to it.

It highlights, I must say, the lack of financial education that is taking place in this country. It is another area where governments of successive persuasions have been abject failures, quite frankly. They say they've got the ASIC MoneySmart website to warn of scams and all of that. That's great; it's fantastic. But when our children come out of the school system and don't understand the difference between compound and simple interest, or even the most basic fundamentals of investing, you think it is a scandal. Education shouldn't just be about history or the application of literature; it should be about equipping them with very sound and sensible life skills.

There are two areas in this where I think you can radically change individuals' lives, and particularly children's. If you equip them with good money habits and an understanding of investment, you will offer them choices and freedom that is otherwise unavailable to them. Similarly, I would say that, if you can teach people to maintain good health habits, you will equip them with a lifetime of, all things being equal, mobility that is going to serve them in good stead as well. I put my money where my mouth is and I wrote a couple of little books for children in this regard on both of those topics because I think they are absolutely critical to the success and the well-rounding of an individual.

They are two abject failures of our education system, and no amount of tinkering around the edges will protect individuals where their own knowledge is deficient. I don't say that to malign the individuals, but, if you do not understand even the most basics of what is being put in front of you, whether it comes to investment, finance, interest rates or fees, then how can you possibly make an informed judgement? It is little wonder, then, that those people, when it doesn't work for them, start to complain about how they've been mistreated and wrongly sold a product or an environment.

That is why the relationship between the adviser and the client is critical—so that they get to know each other, so that they get to know the goals and so that the client can trust them. If we deny individuals that by removing the choice of a complaints mechanism and driving up the cost of financial advice and planning, we limit the ability for individuals to access financial advice. Then, of course, they're driven into the one-size-fits-all fund, which often is the most expensive. These massive retail funds, run by banks or anyone else in their wealth management arms, often have onerous fees and duplicate multiple levels of fees. I'm inherently not attracted to the consolidation of these complaints mechanisms and review mechanisms. I think that it is critical that we provide choice.

I understand that the Labor Party have some amendments to excise the Superannuation Complaints Tribunal from this bill. I also understand that the motives may be less than pure, if I can put it like that.

Senator Jacinta Collins interjecting

I'm sorry to make those suggestions to you, Senator Collins, through you, Acting Deputy Chair, but the fact that the ACTU and the CPSU are opposed to the incorporation of the Superannuation Complaints Tribunal suggests that it's more about the unionised workforce than almost anything else. However, notwithstanding my misgivings regarding your motivations, I'm inclined to support the amendments because I do think that even having two choices in the superannuation space, for example, is much better than having only one.

My preference would be to shelve this bill, quite frankly—and, if the government were smart, they would shelve it and wait for the outcome of the royal commission that they've initiated. I say that because, by their own amendment—I was looking at the running sheet—there is a review of operational amendments still to come. So they're acknowledging that they're going to have a look at this in 18 months time to see if it works and they're doing that in light of the results of the royal commission, which is expected to report in 12 months.

Why are we passing legislation that is going to require a massive amount of change and is going to disrupt an industry? There are many in the financial planning area who have expressed concerns to me with this consolidation and amalgamation and how it's going to affect them and their clients. So why would we be making a change that is going to require a cost—which is, I guess, deleterious to many in the industry—and is going to act in favour of the big banks, whilst at the same time we are having a royal commission, ostensibly into the financial services industry, that is going to examine the conduct of the big banks, amongst many others, and then come back after that and review this legislation? It would be much better, much simpler and much more efficient, given that there is actually a cost to implementing this, to wait until after the royal commission and then say, 'Let's have another look at this.' I'd be happy to go along with that. That would actually be the preferred option.

Whilst I will support the second reading of this bill, I do not commit to its passage or supporting its passage in the third reading. I note there are many concerns in the industry. I note there are many concerns amongst the players involved in it, including the credit industry ombudsman, who said that a banking royal commission should come first before the impact of this and that it impacts upon them. I'm concerned about access to independent financial services, in particular, for the smaller consumers. I'm concerned about the professional indemnity requirements that are going to arise from this, and there are many in that industry as well. This is literally a can of worms that I think is unnecessary, particularly given it was designed to stave off a royal commission. The royal commission has now been enacted, and this bill should be put on the too-hard shelf until the outcome of the royal commission is known.

10:50 am

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

I thank all senators who contributed to this debate. And I would like to thank those crossbenchers who have indicated to the government their support for this Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017. This bill amends the Corporations Act 2001 and other related legislation to overhaul the financial system dispute resolution framework by establishing a new one-stop-shop dispute resolution body, the Australian Financial Complaints Authority, to ensure that consumers and small businesses have access to a free, fast and binding dispute resolution process.

This bill forms part of the government's broader commitment to ensure that where consumers or small business, in particular, have legitimate grievances about the way they were treated by banks or other financial services providers, there is an avenue for efficient but also binding dispute resolution without having to go through the court system.

I would like to just pick up on Senator Bernardi contribution's, where he indicated that we should do nothing in relation to this, in relation to improving the dispute resolution processes for consumers and small business until such time as the royal commission has reported. That goes to the heart of one of our core reservations about a royal commission into the banks and the financial system more generally. We were concerned that this is precisely what would happen, that people would use it as an excuse to do nothing, until such time as the report has been received. The government's view is that we need to continue to act, we need to continue to address issues, we need to continue to take real action. This piece of legislation is a core part of our package of taking action to ensure that consumers and small business, in particular, can have the most appropriate access possible to efficient and binding dispute resolution processes.

Let me make a few other remarks. In addition to the requirements that will be placed on the Australian Financial Complaints Authority via this legislation, the Minister for Revenue and Financial Services will have regard to the AFCA's proposed terms of reference in making an authorisation decision, as stated in the government's commitment to One Nation. The Minister for Revenue and Financial Services will require that AFCA's terms of reference will provide that an adverse inference should generally be drawn from a financial services provider's failure to provide information that is material to the resolution of a dispute, except in exceptional and unusual circumstances. In addition to this, it is her intention that for disputes relating to loans, to primary production businesses, including agriculture, forestry and fishery businesses, she will require the compensation cap of up to $2 million for all disputes about a small-business credit facility of up to $5 million.

I also note the support of both One Nation and Senator Anning for the government's amendments to require a review of AFCA after 18 months. And, again, just responding to some of the issues raised by Senator Bernardi in his contribution, that is just good practice, after a new initiative has been in place for a period, to conduct a review to assess whether it has delivered based on what was intended and, if not, what additional evolutionary improvements can be made to the arrangements that are in place. With those few words, I commend this bill to the Senate.

Question agreed to.

Bill read a second time.