Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Hansard source

This is another reform from the government that was aimed at avoiding a royal commission into the banking and financial services sector in Australia. Nonetheless, Labor is supporting the establishment of an Australian Financial Complaints Authority, despite the shortcomings of this proposal, which I will go through in some detail in my address.

The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill makes changes to the external dispute resolution framework for the financial services sector. It implements the recommendations of the Ramsay review into external dispute resolution, which reported in April 2017. The central change in the bill is the new one-stop shop ombudsman, the Australian Financial Complaints Authority. The AFCA will replace three existing complaints bodies: the two ombudsman schemes—the Financial Ombudsman Service and the small Credit and Investments Ombudsman—and the statutory Superannuation Complaints Tribunal, which operates with respect to superannuation disputes in Australia. The new AFCA will follow the model of the existing ombudsman schemes and will be in the form of a not-for-profit company limited by guarantee. The minister will approve a scheme which will become the AFCA. All financial firms and superannuation trustees will be required to be members of the AFCA. As with the FOS and the CIO at the moment, the operational aspects of the AFCA scheme will be based on private-law contractual obligations between the AFCA and the financial firms who are members of the scheme. At the moment, there are three external dispute resolution schemes: the ombudsman schemes and the statutory SCT.

On closer inspection of the government's plans for the Financial Ombudsman Service and the Credit and Investments Ombudsman, this is simply a merging and a rebadging of the two existing ombudsman services into the one scheme, with a different threshold—and we do welcome the higher monetary thresholds for the disputes that can be heard—but with no new additional powers that the existing dispute resolution bodies don't already have.

The bill also purports to copy and paste the powers of the statutory Superannuation Complaints Tribunal into the new Australian Financial Complaints Authority, which will be a private company listed by guarantee, as I said. However, in doing this, the bill will result in reduced consumer protections for superannuation disputes, and that's the issue Labor has with the government's proposal. The SCT was a specialised tribunal with specialised members who were able to hear complaints regarding superannuation issues from members and others who work in this area, in a timely fashion with expert advice, ensuring that resolutions could be reached. We believe it's disingenuous for the government to try and shut down this SCT scheme because of delays in the resolution of its complaints when we know that the government has cut funding and has cut staff to the SCT, leaving it in a precarious position in terms of the effectiveness and efficiency of its work. These changes risk losing some of that expertise that currently exists in the SCT.

While many of the SCT's powers are replicated in the new one-stop shop, there are changes between the powers of the SCT and the powers of the AFCA that stakeholders say result in a reduction in consumer protections. These include the fact that the bill retains appeal rights for superannuation determinations but does not include the current appeal rights for administrative decisions of the SCT. The SCT has the power to require information required or shared at the initial review stage to be kept confidential at the moment. According to the SCT, information collected during superannuation dispute resolutions can be highly personal, sensitive, inflammatory and identifiable—for example, family members fighting over who is entitled to a death benefit under superannuation life insurance policies. Currently, the SCT has an explicit statutory power to cancel the membership of a life policy fund if it finds that the conduct relating to the selling of that fund was unfair or unreasonable. And there's no limit on the value of the claim that the SCT is allowed to hear. This is important in disputes about life insurance policies held through super funds. The bill seeks to retain this unlimited jurisdiction for superannuation disputes. However, the SCT states that it's unclear that all disputes involving life insurance in super would receive the benefit of the unlimited jurisdiction. The final issue includes the fact that, as a private body, the new AFCA is not subject to freedom of information as currently exists for the SCT.

These reforms were supported by the House of Representatives Economics Committee, and Labor more generally. It's because of the government's strong desire to hold the banks to account that they're doing this, but is it also because of the government's intention to stand up for financial victims of the bank rip-offs and scandals over recent years? I don't believe it is. This body exists because it's one element of the government's attempts to prevent a royal commission into the banks. That's the point that I made earlier: this is another limb of this government's argument to stop a royal commission into the banking sector in this country. It was only when the banks gave the green light to the Prime Minister by writing to him and saying, 'It's okay to hold a royal commission now,' that the government eventually rolled over and held the commission, which commenced its proceedings yesterday.

The key issue that I've raised time and time again is: how is this going to work? The bill and the information provided to the industry, and to everybody with an interest in this, is scant at best. We've held several meetings with stakeholders who work in this industry. They have expressed the reservations that I outlined earlier about the operation of this new one-stop stop—in particular the folding into this body of the Superannuation Complaints Tribunal.

Since 2016, and in response to anger from his backbench about the behaviour of the banks, the Prime Minister has been promising that we will get a low-cost, speedy tribunal to deal with these types of consumer complaints—customer complaints against banks—and that this will be real action. But then the Minister for Revenue and Financial Services had to walk back from this guarantee and argue that the Prime Minister really meant only a 'little T' tribunal, not a 'big T' tribunal. The budget announced a new body, to be called the Australian Financial Complaints Authority, but let's be clear: this reform was designed to take pressure off the banks for that royal commission, a royal commission that the Prime Minister only called when the banks wrote to him and told him that it was okay to do so.

We all know in this place there have been far too many examples of poor behaviour in the banking and financial services sector, going right back to the scandals involving Storm Financial and Trio Capital through to the CBA wealth management scandals, the CommInsure scandals, the bank bill swap-rate scandals and, more recently, the problems that the Commonwealth Bank is having with alleged contraventions of anti-money-laundering and anti-terrorism financing laws. The scandals keep on coming, and it's only through a royal commission that we will be able to get to the bottom of what's going on in this industry for a fair dinkum, independent assessment of the problems in the banking and financial services sector in Australia and with a set of recommendations that all sides of government, including the opposition and the Greens, can have confidence in. Hopefully, we can restore confidence, strength and stability to Australia's financial services industry.

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