James Stevens (Sturt, Liberal Party) Share this | Hansard source

I rise to speak in support of the Financial Accountability Regime Bill 2022 and the other two bills that we're debating concurrently here before the House. We continue to work through the recommendations of the Hayne royal commission, and I'm not certain whether there are many final recommendations from that, after these bills are progressed, that need to be brought before us to complete that process, but I'm very pleased to be speaking on the progression of these bills.

I think that all the outcomes of these bills will be a good thing for ensuring that we've got a robust, transparent, well-run financial system that is doing what it needs to do for our economy, is being kept properly regulated and also has an appropriate amount of oversight in place so that we are protecting the people of Australia and we don't have a financial system that can in any way, to be blunt, unfairly exploit vulnerable people or any people.

The first element is the Financial Accountability Regime, which is about expanding the current BEAR, the Banking Executive Accountability Regime, to include other financial institutions. I think the BEAR is a sensible and very necessary piece of legislation that absolutely is ensuring that the highest standards are in place for people who hold significant positions in banking institutions, on boards and in senior executive roles. We had, unfortunately, seen far too many examples of poor, if not bad, conduct in those institutions and an inability to properly hold particular individuals to account for their role in leadership positions in these institutions and therefore perhaps not having as much pressure on them as there should have been to ensure that their conduct was at the highest of standards. Extending that to insurance companies and other institutions in superannuation et cetera in the financial sector seems completely obvious.

I know this part of the bill, in some way, shape or form, was meant to come before us in the previous term. So I commend the government on bringing this forward for us now. I think the evolution of the BEAR into the FAR is very sensible. Hopefully, that is as comprehensive as we need to be. But no doubt when it comes to the regulation and oversight of the financial sector, which is a very robust, complicated and fast-moving sector, at some point we'll look at it again. But I do believe on the face of it that that does pick up the necessary elements for the financial sector to have the same sort of oversight that deposit-taking institutions have. So we welcome the outcome of the BEAR becoming the FAR.

Next is the compensation scheme of last resort. We've seen examples of people who have received determinations through AFCA, the Australian Financial Complaints Authority. To quickly digress a bit, as members of parliament I'm sure most of us at some point have had cause to refer constituents to AFCA with matters. They are a very important institution. They do a lot of work for people in an extremely frightening circumstance. I've certainly dealt with constituents who have had large amounts of money disappear from bank accounts and things like that and experienced other scams et cetera. So it's good to have a robust organisation like AFCA to work with when people are in a desperate situation, having experienced things like that.

This compensation scheme of last resort creates a fund from this one-off levy for when people get a determination of financial misconduct and that's not very helpful if the entity has perhaps become insolvent or gone bankrupt in the meantime and there's no money for that guilty party to meet the determination against them. We have these schemes of last resort in other parts of our society for different reasons. We are talking about people who have been taken advantage of, who have probably lost something close to, if not the entirety of, their life savings. These are large amounts of money for the people involved.

It's capped at $150,000. I think that's important. That $150,000 for vulnerable people getting these determinations would be an extremely significant amount of money. If they had a determination towards or over that amount, they clearly lost a very significant amount of money. Where there's been a determination to say that there's been financial misconduct and they should be compensated by an amount of money up to, or maybe exceeding, $150,000, they can get up to $150,000 under the scheme. I'm sure for a lot of people this will be a life-changing outcome after an awful situation that they will have been through. If they've gotten to the point of having that determination from AFCA, this compensation to them of up to $150,000 will hopefully mean in most cases that they've had a very just outcome and they'll get the money back that they deserve to get back. I think that's a good outcome that I'm pleased to support progressing through the House.

I know small credit loans have been an area of a little bit of friction in the past—not that I recall in the last parliament but in the parliament before. There have certainly been times when small-amount credit—effectively, payday loans—has been discussed and debated in this chamber. To be fair, this is an area where there's no absolute black and white, right or wrong answer, because there is a risk that, if we are too prescriptive with regulation in this area, the criminal world steps in and does something that the legally oversighted sector should absolutely do. We don't want anyone in a situation where they're engaging with organised criminals and dark actors out there that prey on vulnerable people in a variety of ways. We all know that, within organised crime, one of the many elements to their business model is lending money, and we clearly don't want to get the regulation in this area wrong or so tight that people are forced into the criminal world out of absolute desperation to get access to short-term loans because we've closed off legal avenues for them in a desperate situation.

I absolutely concede that there are many problems on the other side of having too lax a regime in place and that vulnerable people can be tricked and preyed upon by legitimate operators in the lending marketplace if we don't properly oversee them and their conduct of operations. Unfortunately, we are talking about extremely vulnerable people who have to access this kind of finance. It's almost always in circumstances of significant desperation, and that means that they are very easily preyed upon. So getting that balance right is not just a current challenge; it will be an ongoing challenge.

The other thing that we clearly will have to be wary of in this small-amount credit contract space, as it's formally known, is technological developments for other people to operate in this marketplace. This is a broad challenge in the financial sector, of course. Again, the online world and other technological development may lead to avenues being created, particularly in this space, to prey upon people and exploit them. We are going to have to be vigilant. I think there will be ongoing reform, including at a legislative level, that we will need to consider in this space into the future, but I do commend this set of measures to the chamber. The royal commission has given us a lot of valuable recommendations to pursue. They have been worked through over a number of years now.

This is really a part of that process to put in place recommendations where there's legislation required. Without completely recapping the remarks I've already given, I think that in each of the cases that are addressed we are going to see a good outcome for the people of this country and the protection of them from exploitation. We will also have a robustness around our financial sector because it is absolutely the engine room of our economy. The financial sector really is the life blood, the artery of the economy. We're seeing and understanding now. People for the first time in their lives are starting to see changes in the financial sector that they didn't fully understand. There are things like interest rates moving up rapidly et cetera. People are better understanding just how significant the financial sector is and how aware they need to be of these sorts of things, and also how important the sector is to our economy and how important it is for us, as a government, to undertake the appropriate amount of oversight and regulation without getting in the way of the system doing all it can to contribute to the growth of our economy and the betterment of our country. With those comments, I commend the bill to the House.

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