Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

by leave—This is the Standing Committee on Economics' second report of the inquiry into the big four banks. After the first hearing, the Labor members concluded that it was clearer now more than ever that the need for a broader inquiry, beyond the economics committee, remains. The only way to achieve any form of justice for victims of banks and the only way to truly demonstrate what is occurring behind the glossy bank branches and the practices that drive the unethical behaviour in the banking industry is to hold a royal commission. The second hearing involving the bank CEOs allowed each member of the committee, again, just 20 minutes to ask questions, and this is grossly inadequate.

Despite the relatively short time frame between the two House Economics Committee hearings, the banking scandals keep on coming. A collection of the headlines associated with the many scandals that have been occurring in this industry are listed in the Labor members' dissenting report, and they make for sobering reading—from 'NAB accidentally sends 60,000 overseas customers' banking details to wrong email', to 'CBA and NAB admit impropriety in foreign exchange trading'. How about 'Former Westpac banker David St Pierre jailed over $4 million fraud'? The list grows and grows. The structure and culture of the big four banks still promote poor customer outcomes, and this looks unlikely to change without a royal commission exposing many of these issues.

The Sedgwick review's terms of reference, which were set by the banks, focused on pay arrangements for the lower three tiers of retail banking jobs and meant that the Australian Bankers' Association review into retail banking remuneration was prevented from properly scrutinising middle and senior executive pay and bonuses. When the banks were questioned about making their submissions to the Sedgwick review they were very cagey. They initially tried to claim confidentiality in respect of those submissions. Eventually there was some agreement from the banks to provide those submissions but only on an in-confidence basis, and they were with information redacted. However, while some such information has been provided to the committee for review, it was not possible to review all such information prior to the tabling of this report in the parliament. As such, information was provided on a confidential basis, to be reviewed in person only after the parliament last adjourned. The parliament adjourned and then this information was supplied by the banks. It was supplied on the basis that it could not be emailed to committee members and it could not be sent to committee members. Committee members had to come to Canberra to view that confidential information to ensure that it was not taken out of the parliament.

Naturally, none of the committee members on the Labor side wasted taxpayers' dollars in simply flying to Canberra to spend a couple of hours reading documents. The actions of the government members of the committee, in requiring the tabling of this report before the resumption of parliament in May, means that such information may not be reviewed or reported on until late 2017 at the earliest, and is completely antithetical to the purpose of this inquiry, thereby further demonstrating the government's lack of resolve for any proper scrutiny of the banks.

It is notable that the government members of the committee continue to hold to the recommendation for the creation of a banking tribunal. We understand, based on leaks around the budget, that this is going to be confirmed tonight. Some members of the government have many misgivings about this. We will wait and see the details, but if it is simply going to replace FOS and the other tribunals with what will become a legalistic tribunal that locks applicants and customers out of it, then it will not get Labor's support.

As the Labor members recommended after the first hearings, we again urge the government to take responsibility. Stop defending the banks, stop running interference for the banks and stop protecting the banks and doing all you can to avoid a royal commission and the proper scrutiny into this industry that a transparent investigation in the form of a royal commission would achieve. A royal commission into the financial services industry should examine how widespread are the instances of illegal and unethical behaviour within financial services institutions; how Australia's financial services institutions treat their duty of care to their customers; how the culture, ethical standards and business structures of these financial institutions affect their behaviour and their approach to their customers; and whether Australia's regulators are really equipped to identify and prevent illegal and unethical behaviour—one would have to question that, given the number of scandals that have occurred in this industry over the last decade. It should look also at international experiences and how other jurisdictions have dealt with some of the systemic problems in banking, particularly those in the wake of the global financial crisis. Unfortunately, the scandals, rip-offs and scenarios that have played out in the Australian banking industry over the course of the last decade are not peculiar to Australia. We have seen instances in the United Kingdom, with the collapse of banks, with customers being ripped off; the Wells Fargo fiasco in the United States; and, of course, instances in many other European nations.

The structure and culture of the big banks continue to promote poor customer outcomes and look unlikely to change without a royal commission exposing these issues. With the Turnbull government running protection, the true extent of the banks' shonky practices will never see the light of day. The only way to achieve any form of justice for victims of the banks, and the only way to truly shine a light on the practices that drive unethical behaviour in the banking industry, is to hold a royal commission into the banks.

See this speech in context