Kimberley Kitching (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

The committee is considering the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017. The question is that the bill, as amended, be agreed to.

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

by leave—I move Greens amendments (2) to (4) on sheet 8314:

(2) Schedule 1, item 2, page 9 (line 26), after "1052B", insert ", 1052BA".

(3) Schedule 1, item 2, page 11 (after line 7), after section 1052B, insert:

   1052BA Directions to ensure sufficient financing

(1) ASIC may give AFCA a written direction under this section if ASIC considers that AFCA has not done all things reasonably practicable to ensure that the operations of the AFCA scheme are sufficiently financed.

(2) The direction must set out the specific measures that AFCA must take to ensure that the operations of the AFCA scheme are sufficiently financed.

(3) ASIC must not give a direction under this section unless ASIC has given AFCA written notice of at least 1 month of ASIC's intention to issue the direction.

(4) AFCA must comply with a direction made under this section.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1).

(5) If AFCA fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that AFCA comply with the direction.

(6) A direction made under this section is not a legislative instrument.

(4) Schedule 1, item 3, page 29 (after table item 311), insert:

311A Subsection 1052BA(4) 100 penalty units for each day, or part of a day, in respect of which the offence is committed.

We won't be moving amendment (1) as there's duplication. I will briefly speak to amendments (2) to (4). Quickly, on amendment (1), review of the operation of amendments: we asked for a clause to be put in for an independent review that was comprehensive. That was tabled in parliament; that wasn't an legislative instrument. I think that has been dealt with now through the government's own amendments, and it's been recommended by other senators.

In relation to schedules 2, 3 and 4, the amendments are really important. I would really urge the Senate to support these amendments. Essentially, these give the Australian Securities and Investments Commission special powers and consideration to make sure that this new entity, AFCA, is properly financed—that it actually has the funding in place to deal with complaints. I've had experience of this with FOS, one of the entities that's being merged into AFCA. I think I've spoken on 7.30 on this issue, and I know that Senator Xenophon has also made public comments. If not the perception there's the reality that, under the current system, with a huge backlog, it's not necessarily in the banks' or the big financial service companies' interests to get through a big backlog of financial complaints, because they often have to pay them out, and that funding was a real problem. We had accusations that the senators looked at directly where complainants were told that their complaints couldn't be heard, because FOS didn't have the resources at that point in time. We have to make sure that the whole spirit of setting up AFCA—and the Greens support, in this debate, merging FOS and CIO—is that we have a better funding model in place so that there's no hanky-panky or monkey business with providing the funding that's needed to get through backlogs of these complaints.

As a backup—and this is specifically in relation to concerns raised by the CIO and stakeholders around them—we would give ASIC the oversight, which is outlined in some detail on schedule 1, item 2, page 11, where we insert:

   1052BA Directions to ensure sufficient financing

(1) ASIC may give AFCA a written direction under this section if ASIC considers that AFCA has not done all things reasonably practicable to ensure that the operations of the AFCA scheme are sufficiently financed.

(2) The direction must set out the specific measures that AFCA must take to ensure that the operations of the AFCA scheme are sufficiently financed.

(3) ASIC must not give a direction under this section unless ASIC has given AFCA written notice of at least 1 month of ASIC's intention to issue the direction.

(4) AFCA must comply with a direction made under this section.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1).

(5) If AFCA fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that AFCA comply with the direction.

Schedule 1, item 3, page 29, under (4), has the penalties for not doing so. This gives ASIC not only administrative oversight et cetera but also the ability to actually look at the financing of this body. Hopefully that won't be a problem; hopefully this will work. If not, ASIC has the ability to fund those.

I do have some specific questions that I want to ask in relation to the new body, Minister, so I might get through those quickly, if that's okay. I will come back to the amendments in a second. This is in relation to the power to obtain documents under the new AFCA architecture. Will AFCA be given the power to obtain documents for non-superannuation related matters? Very quickly, under FOS's current terms of reference, where a party to a dispute without reasonable excuse fails to provide or procure information or to take any other step requested, FOS may make an adverse inference and rule against the party on that basis. Will AFCA have that power?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

Yes.

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

In terms of the funding model and the levying formula, the AFCA consultation paper includes, among other things, the following as likely principles for the funding model:

Will the government commit to those principles?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

Yes.

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

In relation to public reporting, currently under their terms of reference, FOS must produce a report at least every 12 months, which includes a comprehensive summary and analysis of the data collected. Amongst other things, it includes the following statistical information about each financial services provider: the number of disputes referred to FOS, the number of disputes closed and the outcome of these disputes. Will AFCA make the same requirement?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

Yes, they will, Senator.

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

I didn't think it'd be this easy! That was unclear from the minister's media release on 14 September 2017. In relation to staff—I know this one might be a bit more difficult for you to answer, Minister—do you expect there'll be more employees in total under the new body?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

I'm advised that it is actually a matter for AFCA.

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

Well, could I ask where AFCA will be located?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

It will be a matter for the AFCA board.

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

What happens to the current employees of the SCT? Unfortunately, we lost the amendment today to have it excluded at this point in time. These are the kinds of details that are really important to the staff that are working at the SCT, and the CPSU, the union. If it were in Melbourne, it would be a lot easier on the staff. Why haven't these details been worked through yet?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

It's my advice that the members of the SCT are employees of ASIC, and they will have the option of returning to ASIC if that's what they choose to do so. But, equally, an option for them to go to AFCA may be available to them, if the appropriate conditions are suitable to the employee.

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

I mentioned in my second reading—and we've gone through it in a bit of detail today—that the TOR for this new body, or the details, haven't been worked out yet or disclosed. In conversations with the minister, we've repeatedly raised concerns about loss of jobs, particularly with the SCT being merged into this entity. It does concern me that a location hasn't even been picked for where this is going to be. If you've got employees in one town, like Melbourne, it is obviously going to be a lot harder for some of them to move if it's going to be somewhere else. Can you say why they haven't decided yet where the location of this is going to be? Will you give assurances here today that, if there are employees at the SCT that aren't going to go to AFCA, for whatever reason, they will be redeployed within the public service?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

The current employees of the SCT, as I said before, are currently employees of ASIC on secondment to this organisation, so they can't lose their jobs and they won't lose their jobs. They will have the option of returning to ASIC, if that's what they want to do. Equally, once the new organisation has been established—subject, obviously, to the approval of this chamber—the details of the employment opportunities for those people that are currently working not just at the SCT but in the other two ombudsman offices will be available to them, should they wish to apply.

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

In relation, once again, to the SCT and the merging of the superannuation complaints mechanism into AFCA, it's pretty obvious to them that the devil's going to be in the detail in relation to the rules and operational arrangements of AFCA, which are still being developed. What consultation will the minister undertake from this point? Will these details be the subject of extensive consultation with industry stakeholders such as the CPSU, Industry Super and ASFA?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

The transition team, which is currently being headed up by Dr Malcolm Edey, will be doing extensive consultation in relation to the details.

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

You're giving assurances here today that there will be extensive consultation?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

Dr Edey is already out consulting at the moment and will continue to do so.

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

I have another question in relation to this. I understand that Pam McAlister from Mercer is developing the rules and operational arrangements for AFCA with Treasury. Have some financial institutions already been consulted on the governance and funding issues? Could you tell us who they are? Have any not-for-profit representatives been consulted?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

I've been advised that it's a public consultation process, which means that anybody is able to take part in the consultation.

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

So not-for-profit representatives within the superannuation industry will be able to participate or you will be consulting with them directly on the many fine details that we're yet to see about how this is going to work?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

I've been advised that CALC and ISA have already been consulted as part of this process, but in response to your general question the answer is yes, the access is available to them.

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

Just to clarify—the process has come to the point where we have the legislation. My question was specifically into all the details around the terms of reference and the operational rules and arrangements, which we're yet to see. I don't think anyone has seen them. Will you be going through extensive consultation processes with those stakeholders?

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

There is already a consultation paper that's out in the public domain. The terms of reference of the consultation are outlined in that, and it is quite clear that that is what they are consulting about.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Labor would like to indicate that we will be supporting the Greens amendments on sheet 8314. These amendments give ASIC explicit power to direct AFCA to take steps to ensure that it is sufficiently financed—fundamental for any organisation. It's important that the new AFCA has adequate resources to properly consider disputes, and we note that ASIC has a directions power under the bill with respect to AFCA. We will support this amendment, to put beyond doubt that this includes making sure that the AFCA scheme is sufficiently financed.

Kimberley Kitching (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Senator Whish-Wilson, could I confirm that you do not wish to move amendment (1) on sheet 8314?

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

That's correct; just amendments (2), (3) and (4).

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

Before you put the question, Madam Temporary Chair, I would like to say that the government will not be opposing these amendments, although we would like to put on the record that we believe that providing these additional powers to ASIC is unnecessary, because we believe that the legislation already currently provides the general direction powers to ASIC that it can to ensure that AFCA is adequately funded. However, in that context, we will not be opposing the Greens amendments.

The TEMPORARY CHAIR: The question is that amendments (2) to (4) on sheet 8134 be agreed to.

Question agreed to.

(Quorum formed)

Bill, as amended, agreed to.

Bill reported with amendments; report adopted.