David Coleman (Banks, Liberal Party) Share this | Hansard source

Those opposite did absolutely nothing about the Australian banking system during their time in office, and this government is taking action now on a very wide range of fronts. Let me run through a few of them. Firstly, there are interest rates. The ACCC now has the power to go into the banks and get documents about the process by which banks set interest rates. When the banks say they had no choice but to raise interest rates because of external factors, the ACCC will now be investigating that exact issue. They will be going into the banks, getting the board minutes, getting the interest subcommittee minutes and determining whether or not that is in fact the case. That's a very good thing for competition. It's happening because of this government, out of the House's Standing Committee on Economics inquiry. It's a very, very positive development. It's happening now. All Australian bank executives should be on notice that representations about interest rate policy settings are now subject to internal ACCC scrutiny. That's a very positive development.

We're also setting up the Australian Financial Complaints Authority. Previously, there were three different authorities in this area. It was quite confusing for consumers to know where to go and who to talk to. We're now setting up a one-stop shop for complaints against financial institutions: the Australian Financial Complaints Authority. The outcomes will be binding on those institutions. When the authority makes a decision, consumers can pursue claims up to $500,000 and small business can pursue claims up to $1 million. There's no need to go to court and spend the large amounts of money involved in court proceedings. It's a very, very important reform implemented by this government.

We've also implemented the Bank Executive Accountability Regime. It's true that there has not been enough accountability in senior executives in banks, as we have seen from the failures in the banking system. What we saw and what we recommended in the House's Standing Committee on Economics inquiry was for an executive accountability regime to be established. The government has done that. What we are seeing is that fines of up to $200 million can be enforced by APRA if banks are in breach of their prudential obligations.

We're also going to require the banks to have a very clear map of who's responsible for what so that there can't be finger pointing within banks to say, 'It wasn't my area; it was that person's area.' That will all now be set out in a very clear document, which will mean there is nowhere to hide and the bank executives who are responsible for divisions in which there is malfeasance will be held accountable. That's a very important development.

We've also seen concerning allegations recently regarding the Commonwealth Bank and its conduct in relation to cash deposits. These are allegations made by AUSTRAC which are very serious in nature. The government has set up an inquiry, led by Dr John Laker, the former chairman of APRA, and also supported by former ACCC chairman Graeme Samuel and company director Jillian Broadbent. This inquiry is looking specifically into the Commonwealth Bank's issues of governance and culture. It will investigate those issues and report back to the government by January with an interim report focused on the issues within the Commonwealth Bank. It will identify any problems and make recommendations to government about the ways in which the Commonwealth Bank should improve.

We also have competition. One of the problems in the Australian banking system has been a lack of competition. For instance, in the last decade there was only one licence issued for a new start-up bank in Australia. That's unacceptable. Consequently, we're changing the rules so that it will be easier to get a bank off the ground. Previously, you had to have $50 million of cash before you could even get a banking licence. You can imagine that, if you are trying to raise the money to get a bank off the ground, asking people to give you $50 million on day one, before you've even got a licence, is a very difficult thing. So now there will be a two-stage process. People will be able to get a bank off the ground with a much smaller amount of funds and then get a full banking licence later. That is what's happened in the UK in recent years, and we've seen several dozen new entrants to the banking sector as a consequence.

So there are very important reforms across a whole range of areas, including on accountability of banking executives, ensuring focus on competition and giving consumers a one-stop shop to address the problems they have with banks. This government is taking action very aggressively across a wide range of areas in the banking sector.

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