Andrew Wilkie (Denison, Independent) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

At the moment there exists only a voluntary Code of Banking Practice. That code is developed entirely by the Australian Bankers' Association, a body run by and funded by 25 banks, and the latest version is some four years old. While 18 banks (including the big four banks) have signed up to this voluntary code, it is indeed voluntary, and five per cent of the retail banking market in Australia is not even covered by it.

At face value the current code looks pretty good, because it includes provisions on:

There is a mechanism, then, for investigating complaints in the Code Compliance Monitoring Committee, or the CCMC.

But, frankly, the CCMC is ineffective, because it is established, run and funded by the industry. Moreover, the CCMC is not an effective method of dealing with complaints from customers directly, because what it can actually investigate or do is very narrow. Indeed, instead of complaints from customers, the CCMC deals mainly with self-reported breaches of the code from the banks.

Customers can take general complaints about banks to the Financial Ombudsman Service, which also covers insurance companies and other financial services. But, again, the Financial Ombudsman Service is run and funded by the industry. In 2015 the ombudsman did receive more than 34,000 complaints, which was an increase of seven per cent, and it does have the power to refer cases of serious misconduct to ASIC, but in 2015-16, out of more than 34,000 complaints, it referred only—wait for it—five to ASIC. You might ask: what about the Australian Prudential Regulation Authority? But APRA, the bank regulator, simply does not deal with individual complaints. So, in short, for customers with complaints about banks there is simply no complaint mechanism that is not run by the industry, and people must resort to private legal action, which, of course, is an impossible proposition for most members of the community.

This bill would fix all of that because it would make the current Code of Banking Practice a legal instrument and it would empower APRA to deal with complaints that banks have breached the code and to issue penalties where appropriate. The bill requires APRA to name and shame banks that breach the code and also requires the minister to update the code every three years and to consult the banks' customers, both individuals and small businesses, when doing so. To summarise, this bill would turn self-regulation into government regulation and would turn voluntary into mandatory. It would finally give banking customers some rights when dealing with their financial institution.

This is in fact the second time I have sought to do this. I tried during the previous Labor government, back in September 2012. It is telling that when I tried to move an identical bill five years ago neither the Labor government nor the Liberal/Nationals opposition expressed any interest in it or any support for it. In fact, the Selection Committee refused to bring it on for a detailed debate and a vote. It simply went to show that when I tried it last time neither major party had any interest then in serious banking reform. This is despite the fact that serious reform is needed. You only have to pick up any newspaper on any day or turn on the news on any night and it seems there is another story about bank misconduct.

There can be no doubt that some of the banks are behaving dreadfully a lot of the time and it is our role in this place to do something about it. Indeed, in my 6½ years in parliament—and I think I can speak for my cross-bench colleagues—in all of our time in the parliament we have received numerous complaints from individuals about the way they have been treated by the banks and the inability they experience in trying to do something about it. Most people do not have pockets deep enough to take on the banks, so we are left powerless. I am sure we on the cross bench have come across many people in that situation, and not just individuals. There is one business group in this country that is being right royally screwed by the banks right now, and that is small business, because small businesses, like individuals, simply do not have the power in that relationship to deal with problems and to deal with being treated poorly by the banks. A small business cannot afford to go to court and take on Westpac, NAB, the Commonwealth Bank or ANZ, because, for a start, they have limited financial resources but also because the banks will throw everything at it to make sure they do not lose in court. I must say that my activism on this issue has been informed and really energised by my dealings with the Tasmanian Small Business Council. I would like to acknowledge the president, Geoff Fader, and the executive officer, Robert Mallett, for the assistance they have given me in understanding this issue and understanding how small businesses are suffering just as much as individual customers when it comes to misconduct by the banks.

More than ever, we need to do something about this. That behaviour of the banks right now is appalling. In the last year, the banks have posted profits of some 30,000 million dollars. Bank profits in this country right now are at about 2.9 per cent of GDP. That is almost an unfathomable thing to get our minds around. The profit of the big four banks is almost 3 per cent of our country's entire gross domestic product—that is just a mind-boggling figure—and it is about three times the profit, as a proportion of GDP, when compared with the banks in the United Kingdom and in the United States. It is unfathomable. And what has happened in the last few weeks? Banks have started jacking up home mortgage rates. Isn't $30 billion enough profit? Do they have to go after not just investors but owner occupiers and say, 'Sorry, Mr and Mrs X, we are not making enough profit. Thirty thousand million dollars—we are on our arse here. We need more money, so we are going to jack up the interest rate on your owner occupied home.' This is unconscionable behaviour.

Is the government doing anything about it? No. The government's refusal to have a royal commission into the conduct of the banks is unconscionable. Although five years ago the Labor Party had no interest in a mandatory code of conduct, at least the Labor Party is red-hot on the issue of a royal commission, and I applaud it. It is simply not good enough for the Prime Minister to have stood up last year and said, 'We'll pull the bank leaders in before the House of Representatives Economics Committee and they can explain themselves once every year or so.' It is simply not good enough. Then, the government wants to give the banks a $7 billion tax cut. So, not only are the banks making $30 billion a year, not only are they jacking up owner occupied interest rates on mum and dad and their families, but the government wants to give them another 7,000 million dollars profit. What is going on with the government? They are totally beholden to the banking industry.

Today is an opportunity for the government, supported by the opposition and my cross-bench colleagues—the numbers seem to be growing at the moment and I am delighted with that—to show that we in this place care about the community and that we are concerned about the conduct of the banks. If nothing else, we will turn an ineffective bank-run voluntary code of conduct into a legislated mandatory code of conduct where the minister has power, where APRA has punitive powers, and we can finally rein in the power of the banks.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Just a couple of things: (1) thank you for saying 'good morning' and (2) I caution you on some of the language you used during your contribution. Always bear in mind parliamentary language and the fact that we have school groups in the building. Is the motion seconded?

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

I am very happy to second this motion and reserve my right to speak.

Debate adjourned.