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

On behalf of the Standing Committee on Economics I present the following reports, together with the minutes of proceedings: Review of the four major banks: Third report, incorporating a dissenting report; and Review of the Australian Securities and Investments Commission annual report 2016.

Reports made parliamentary papers in accordance with standing order 39(e).

by leave—Since the House of Representatives Standing Committee on Economics commenced its inquiry into Australia's four major banks in October 2016, we have held three major rounds of hearings. Of course, our April report contained 10 recommendations, nine of which were adopted by the government in the May budget in relation to consumer complaints, the Banking Executive Accountability Regime, new powers to the ACCC in relation to interest rates, establishing an open data regime to increase competition in the sector and also improving regulatory requirements to make it easier for banks to get off the ground, because at the moment it's very, very difficult.

In October of this year, the banks appeared before the committee in the third round of public hearings. One of the critical issues which forms the basis of recommendation 1 of this report concerns so-called tap-and-go payments. What happens at the moment is, if a consumer has a debit card that also has credit functionality—an EFTPOS and visa functionality, known as a debit card—and presents that in a payWave or tap-and-go function, that the banks route that payment through the credit network. What that means is that merchants pay higher fees than they would if it went through the EFTPOS network. Ultimately, the merchant may pass on those fees to customers. Those fees are estimated at hundreds of millions of dollars.

The committee is strongly of the view that the banks should be required to give merchants the choice about whether those payments are routed through the EFTPOS network or through the international credit scheme network. This is a very, very important point. The Retailers Association estimates this issue costs merchants $290 million per year and, of course, that money has to come from somewhere, and that somewhere ultimately is customers. So it's very, very important that the government adopts recommendation 1 of this report, which is that, if the banks don't voluntarily provide this choice to merchants by 1 April 2018, the Payments System Board should take regulatory action to require it to happen. This issue should have been addressed earlier. It certainly should be addressed by no later than April of this year. It is good that the ANZ has committed to do this in the public hearings. The other three banks need to follow up on that and implement this immediately.

I won't detain the House, but I would note that another important issue raised in the hearings was the imposition of increased interest rates on borrowers in interest-only loans. The banks argued that this occurred in response to regulatory requirements of APRA. The ACCC, using its new powers following on from the recommendation of this committee, is now investigating that issue to determine whether the banks' public statements about these interest rate rises were, in fact, accurate or misleading and deceptive. It's a very important issue and it's very important that the ACCC conducts very granular analysis. What that means is that the ACCC needs to really understand the mechanics of the financial modelling and financial estimates of the banks. It needs to take that very granular and very detailed information and compare it to the public statements of the banks. And the ACCC, using the horsepower which, no doubt, it possesses, needs to determine whether or not what the banks have done was misleading and deceptive, and the committee certainly awaits that report with interest. Of course, the issues related to the Commonwealth Bank and the AUSTRAC allegations against it are very serious and formed an important part of the inquiry, and the report contains a recommendation in relation to that matter as well.

We table the committee's report in relation to the recent ASIC hearings. We discussed a number of matters related to the banking sector such as the Financial Complaints Authority, the Banking Executive Accountability Regime and other matters. The report goes through these issues in some detail. On behalf of the committee, I thank the chairman of ASIC, Mr Greg Medcraft. It was his last appearance before the committee at the hearing on 14 September. The committee thanks Mr Medcraft for his service to the nation in his capacity as chairman of ASIC and we wish Mr Medcraft every success in the future. I commend both of these reports to the House.

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