Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

There were hundreds of hours of consultations to ensure that the details of the bill reflected what the government promised and that there were no unintended consequences. It's not perfect. It requires some amendment. I foreshadow that I will be moving an amendment in the second reading stage and that there will be some substantive amendments at the consideration-in-detail stage moved by both the member for Kingsford Smith in relation to good value on insurance products and me in relation to matters concerning superannuation trustees.

While I'm on the matter of superannuation, it's extraordinary that yesterday, in this House, we had government members saying that if you allow the government to cut your superannuation they will give you a pay rise. The fraud in that statement was revealed today, when at the dispatch box the Minister for Industrial Relations revealed the truth. The government plan to cut your superannuation and your pay, and they've introduced a bill into the House today that will enable that to happen. We won't be having a bar of that either.

Going to the matters before the House in the bill, schedule 1 of the bill provides certain provisions of financial services industry codes can be made as enforceable code provisions where provisions within industry codes relate to specific commitments made by a code subscriber to the consumer. ASIC is given the power to approve these codes and will have the power to designate certain provisions within those codes enforceable—not just as a matter of contract but enforceable under the statute. Different penalties provide for voluntary codes as well as mandatory codes.

Schedule 2 of the bill deals with an insurance matter. The member for Kingsford Smith will go into this in some detail. It will, in short, prevent insurers from cancelling a life insurance contract on the basis of nondisclosure or misrepresentation unless the insurer can show that it would not have entered into the contract on the basis of that information. I want to bring members back to some of the examples that were seen and exposed by the Hayne royal commission. We heard from the member for Forde, for example, who suggested in his contribution that there were rare examples where claims against a life insurance contract weren't honoured. In fact what the Hayne royal commission discovered was that at least in one and perhaps in many other life insurance companies there was a system—in fact, a program—of denial of claims based on outdated, erroneous and disputed medical advice that even the medical advisers within the company suggested was out of date and improper. This matter was brought to the attention of the royal commission. This schedule of the bill implements that recommendation of the royal commission, not before time.

Schedule 3 of the bill implements the government's commitment to an industry-wide deferred sales model for add-on insurance products. That's an important measure. We are willing to work with industry on some of the areas that require special exception or special attention. The regulations that will be made pursuant to this bill facilitate that. We will work cooperatively with the government on ensuring that any carve-outs that exist are in the interests of consumers. I know the member for Kingsford Smith is going to have more to say about that shortly.

Schedule 4 of the bill provides ASIC with the power to impose a cap on commissions that can be paid for add-on insurance. That's an important measure. We've seen in some instances the commissions that were being paid to the salespeople flogging the insurance product were far in excess of any other claims that were made. More was going out and into the pockets of the people selling the product than was going back in terms of claims to the people who took the insurance out. Improper, wrong, needs to be scratched out—this schedule of the bill will do that.

Schedule 5 of the bill responds to the Hayne commission's recommendation to prohibit the hawking of superannuation and insurance products. This provision is absolutely critical. Nobody could not have been moved when they heard the evidence in relation to this issue of a young man with disabilities—with Down syndrome, I believe—taking a call from an insurance salesperson attempting to sell him a life insurance product that he never understood and didn't need with the behaviour driven by a commission. It was absolutely abhorrent, heart-wrenching evidence. The father has subsequently become an advocate for the full implementation of the Hayne commission recommendations and a staunch opponent of the government's proposals to wind back recommendation 1.1 on the responsible lending laws. It's an important provision.

There are some matters of detail that we may need to revisit on the issue of antihawking. We note that the antihawking provisions go specifically to phone based selling, direct-selling mechanisms. Of course, we know in modern marketing and sales there are a whole bunch of other mechanisms that may need to be considered down the track if industry does not respond appropriately on this issue.

Schedule 6 of the bill is going to prevent organisations from calling themselves an insurer unless they in fact are. It doesn't seem like a remarkable imposition, but the commission heard evidence, particularly in the area of so-called funeral cover or funeral insurance, where people, particularly in Indigenous communities, were being flogged products on the basis that they were insurance that weren't; they were certainly unconscionable and junk products. It's an important schedule to the bill.

Schedule 7 is going to enhance consumer protections by making insurance claims handling a financial service. This goes to the claims for fulfilment process to ensure that that falls within the rubric of ASIC regulation—again, it's important.

Schedule 8 will prohibit superannuation trustees from having a duty to act in the interests of another except from those arising in its role as a trustee. This is about dealing with embedded conflicts of interest within a trustee of a superannuation fund. Again, the royal commission heard lots of evidence of this, particularly within vertically integrated and retail based insurance funds and their trustees.

Schedule 9—I want to give the member for Kingsford Smith the opportunity to talk in a moment, and we've got an agreement with the government that we'll keep our comments reasonably brief. However, I do want to say something briefly about schedule 9—that is, the government's implementing measures in schedule 9 beyond those things recommended by Hayne. They are going to have a significant consequence, which, if not remedied, will visit a lot of mayhem and perhaps disaster on the industry. They need to be fixed. We want to work with the government to fix this issue, and I'll have some amendments which deal with that shortly.

I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes the Government:

(a) has acted consistently to delay action to protect Australians from financial sector misconduct, including by voting against a Banking Royal Commission 26 times; and

(b) intends to ignore the first recommendation of the Hayne Royal Commission by repealing the responsible lending obligations put in place by Labor in 2009 to protect Australian consumers from financial sector misconduct; and

(2) further notes the bill still leaves important recommendations of the Hayne Royal Commission to be implemented".

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