Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

My contribution, with this opportunity, is to speak briefly in relation to matters around the banking royal commission or, more importantly, about some of the issues that the royal commission has exposed. For so many in this parliament, across both sides of the aisle, it is a matter now of history that for a decade or more there were increasing concerns about the behaviour of our financial institutions, not just confined to banking but in the fields of insurance, superannuation and financial advice. I think that it's not an understatement to say that the revelations to date with the Hayne commission of inquiry have shocked all of Australia and, indeed, certain sectors in the financial community. I don't think anyone had a real handle on the depth, breadth, complexity and systemic nature of the behaviour within the banking systems.

Tragically, some of it was policy driven within those institutions. When I say 'policy driven', they created an environment with the highest possible risk for these behaviours to emerge. Commissioner Hayne has used the word 'greed'. Wherever you have things such as incentivised lending or bonus schemes for senior executives that are indexed into financial performances then, of course, that will drive an effort by all concerned to do whatever it takes to increase the volume of their financial interactions with customers, not necessarily in the customers' interests but in the interests of the bank. Where you have incentivised lending—that is to say that an officer of the bank is only rewarded if they successfully lend some people money—it should come as no surprise that they will do whatever it takes, and most times that won't be in the interests of the customer.

On the retail lending end, we have seen the impacts of this particularly in, but not confined to, agriculture, where security assets provided by the borrower cover everything. They don't have an opportunity to separate the family home or any other goods, chattels or tools of trade from the lending. They are all covered by an umbrella of security. So when they get a stone in their shoe and things don't go well and there are foreclosures, they lose everything. Sometimes their entire life's effort and, indeed, a generational effort is concerned.

Then we have financial advisory services. I don't mean to reflect adversely on most Australians, but so many—myself included for phases of my life—are quite unsophisticated when it comes to investing. When we present ourselves to financial advisers, we're expecting to get sound, professional, independent advice. There are tens of thousands of financial packages, products and opportunities out there for companies to invest in—buy shares, manage funds, trusts and so on—yet the banks saw a major opportunity and bought up these financial services. When ordinary Australians are at a financial services business, they're probably dealing with a little bit or a lot of accumulated wealth depending on their status in life, and they are all in. I suppose the customers had the same attitude towards them as they would to their pharmacist or medical practitioner. They thought, 'They're in my corner; they're going to guide me and give me the best advice.' We all know what happens when they're bought by a particular financial institution: the investment advice you're given is confined to the parameters of products and investments owned by that particular bank, and the same with insurance. We've had ample evidence over time of where the banks and major insurance companies have owned up to 19 different brands of insurance, and they refer clients amongst the brands without telling them that they own them all.

I had a case brought to me by someone I know very well, a relative, who worked for a major insurance company. He or she was trained to say to customers on the phone, 'I'd lose my job if they knew I was going to tell you this, but I think you'd be better off going to the ABC insurance company. I know our company will lose your patronage, but I think you'd be better off over there'—all the while putting that intelligence into a system. The customer goes away and phones the recommended 'ABC' company, and a young man or woman in the booth next door answers the call, because all the calls come into one controlled centre. This stuff borders on criminal activity.

I've said before that no amount of legislation, regulation, oversight or investment in ASIC and APRA will ever solve this problem. These places are too big for regulators and law enforcement agencies to stay on top of. This has to come with a cultural shift. As I have said in this place before, I was involved in two royal commissions and the implementation in both instances of the recommendations of the commissioners. One had to do with law enforcement and the other had to do with corrections. I have seen major shifts in cultural behaviour within those particular sectors as a result of their corruption being exposed over a long period of time. We're seeing that with the banks, but I have a fear. I will continue to increase my call for the banks to divest themselves of ownership—split up, if you like—and send off the financial advising assets that they have so they can go back to being truly independent advisory centres where people can rely upon their advice and not be wondering whether they're getting the wool pulled completely over their eyes.

The banks are not immune to arguments about impacts of this behaviour. I know the names of families where suicides have occurred. I don't know whether people have brought some of the pain upon themselves, and I'm not suggesting for one moment that in some cases it may not have been the case. I'm not suggesting the banks are responsible for every circumstance where there has been a foreclosure in a family, but there are many where that was the case. These people were taken to the edge of the envelope with respect to their investments, encouraged with soft money, overdrafts, interest-only and no obligation to pay down the capital for years. This money was spent on supporting themselves in many cases through drought conditions, and it was never going to return. The productivity of the property never had the capacity to return it.

Ten minutes isn't enough time, so I will visit this again. But I want to send a clear message: nobody trusts the banks anymore. No-one in this parliament, I suspect, trusts the banks at the moment and I expect that generations of parliaments will watch them very, very closely. We will watch to see if their behaviour as they respond to these revelations is the appropriate behaviour to resist and militate against the chances of this happening again. I think they need to have a very hard look at divesting themselves of these more risky practices.