Stuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I present a supplementary explanatory memorandum to the bill. I ask leave of the House to move government amendments (1) to (9), as circulated, together.

Leave granted.

by leave—I move government amendments (1) to (9), as circulated, together:

(1)   Schedule 1, item 5, page 5(afterline6), after the definition of excludeddealingin subsection 994A(1), insert:

financial product has the meaning given by subsection 994AA(1).

[meaning of financial product]

(2)   Schedule 1, item 5, page 5, at the end of the definition of regulatedsalein subsection 994A(1), add:

  ; or (c)   made in circumstances prescribed by regulations made for the purposes of this paragraph.

[meaning of regulated sale]

(3)   Schedule 1, item 5, page 6(afterline32), after section 994A, insert:

994AA Extended operation of this Part in relation to ASIC Act financial products

  (1)   In this Part, financialproduct means each of the following:

  (a)   a financial product (within the meaning of this Chapter) (see section 761A);

  (b)   a financial product (within the meaning of Division 2 of Part 2 of the ASIC Act), other than a financial product covered by paragraph (a).

Note:   Whether a target market determination is required to be made in relation to financial products covered by this extended definition is determined under section 994B, including any regulations made for the purposes of paragraph 994B(3)(f).

  (2)   In determining the meaning of a term used in a provision of this Part (other than this section), treat a reference in this Act to a financial product as being a reference to a financial product within the meaning of subsection (1) of this section.

[meaning of financial product]

(4)   Schedule 1, item 5, page 7 (after line 10), after paragraph 994B(1)(b), insert:

  (ba)   the product is covered by paragraph 994AA(1)(b) (about the extended operation of this Part) and:

  (i)   the person issues the product to another person as a retail client; or

  (ii)   the person sells the product under a regulated sale; or

[target market determinations for financial products]

(5)   Schedule 1, item 5, page 7, line 15, omit "or (b)", substitute ",(b)or(ba)".

[target market determinations for financial products]

(6)   Schedule 1, item 5, page 25 (line 7), after "section", insert "994B,".

[civil liability]

(7)   Schedule 1, item 5, page 26 (after line 5), at the end of Division 6, add:

994P Orders to redress loss or damage suffered by non-party consumers etc.

Orders

  (1)   If:

  (a)   a person engaged in conduct (the contraveningconduct) in contravention of section 994B, 994C or 994D or subsection 994E(1) or (3); and

  (b)   the contravening conduct caused, or is likely to cause, a class of persons to suffer loss or damage; and

  (c)   the class includes persons (non-party consumers) who have not been a party to proceedings under this Act in relation to the contravening conduct;

the Court may, on the application of ASIC, make such order or orders (other than an award of damages) as the Court thinks appropriate against a person referred to in subsection (2) of this section.

Note:   The orders that the Court may make include all or any of the orders set out in section 994Q.

  (2)   An order under subsection (1) may be made against the person who engaged in the contravening conduct, or a person involved in that conduct.

  (3)   The Court must not make an order under subsection (1) unless the Court considers that the order will:

  (a)   redress, in whole or in part, the loss or damage suffered by the non-party consumers in relation to the contravening conduct; or

  (b)   prevent or reduce the loss or damage suffered, or likely to be suffered, by the non-party consumers in relation to the contravening conduct.

Application for orders

  (4)   An application may be made under subsection (1) even if a proceeding in relation to the contravening conduct has not been instituted.

  (5)   An application under subsection (1) may be made at any time within 6 years after the day on which the cause of action that relates to the contravening conduct accrues.

Determining whether to make an order

  (6)   In determining whether to make an order under subsection (1) against a person referred to in subsection (2), the Court may have regard to the conduct of the person, and of the non-party consumers in relation to the contravening conduct, since the contravention occurred.

  (7)   In determining whether to make an order under subsection (1), the Court need not make a finding about either of the following matters:

  (a)   which persons are non-party consumers in relation to the contravening conduct;

  (b)   the nature of the loss or damage suffered, or likely to be suffered, by such persons.

When a non-party consumer is bound by an order etc.

  (8)   If:

  (a)   an order is made under subsection (1) against a person; and

  (b)   the loss or damage suffered, or likely to be suffered, by a non-party consumer in relation to the contravening conduct to which the order relates has been redressed, prevented or reduced in accordance with the order; and

  (c)   the non-party consumer has accepted the redress, prevention or reduction;

then:

  (d)   the non-party consumer is bound by the order; and

  (e)   any other order made under subsection (1) that relates to that loss or damage has no effect in relation to the non-party consumer; and

  (f)   despite any other provision of this Act or any other law of the Commonwealth, or a State or Territory, no claim, action or demand may be made or taken against the person by the non-party consumer in relation to that loss or damage.

994Q Kinds of orders that may be made to redress loss or damage suffered by non-party consumers etc.

     Without limiting subsection 994P(1), the orders that the Court may make under that subsection against a person (the respondent) include all or any of the following:

  (a)   an order declaring the whole or any part of a contract made between the respondent and a non-party consumer referred to in that subsection, or a collateral arrangement relating to such a contract:

  (i)   to be void; and

  (ii)   if the Court thinks fit—to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

  (b)   an order:

  (i)   varying such a contract or arrangement in such manner as is specified in the order; and

  (ii)   if the Court thinks fit—declaring the contract or arrangement to have had effect as so varied on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

  (c)   an order refusing to enforce any or all of the provisions of such a contract or arrangement;

  (d)   an order directing the respondent to refund money or return property to a non-party consumer referred to in that subsection;

  (e)   an order directing the respondent, at the respondent's own expense, to repair, or provide parts for, goods that have been supplied under the contract or arrangement to a non-party consumer referred to in that subsection;

  (f)   an order directing the respondent, at the respondent's own expense, to supply specified services to a non-party consumer referred to in that subsection;

  (g)   an order, in relation to an instrument creating or transferring an interest in land, directing the respondent to execute an instrument that:

  (i)   varies, or has the effect of varying, the first-mentioned instrument; or

  (ii)   terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument.

[redress for loss or damage arising from contravention]

(8)   Schedule 2, item 7, page 30 (before line 21), before the definition of financialproduct in section 1023B, insert:

ASIC Act financial product means a financial product within the meaning of Division 2 of Part 2 of the ASIC Act.

[meaning of financial product]

(9)   Schedule 2, item 7, page 30 (lines 21 to 25), omit the definition of financialproduct in section 1023B, substitute:

financial product includes an ASIC Act financial product but does not include:

  (a)   a financial product issued, or offered for regulated sale, by an exempt body or an exempt public authority; or

  (b)   a financial product specified in regulations made for the purposes of this paragraph.

[meaning of financial product]

Clare O'Neil (Hotham, Australian Labor Party, Shadow Minister for Justice) Share this | Link to this | Hansard source

I'm very pleased to have the opportunity today to speak on the amendments that are being moved to the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2019. Labor was always very supportive of this legislation. I'm actually even more pleased to be here speaking on the amendments, because they do make some important changes that will help protect Australians from dodgy conduct by financial providers.

I want the House to be under no illusion though. These are Labor's amendments. They're amendments that we pushed for the moment that the design and distribution obligations bill was presented into the House, and, in fact, the government fought them for a long time. I do want that to be understood for the public record.

What Labor called for initially was for products such as buy-now pay-later to be included in the scope of the bill. We wanted the government to include dodgy funeral expenses products in the bill and we wanted credit providers to be covered by design and distribution obligations under the bill too. I'm very glad the government has come to the table with these amendments. It's better late than never. Unfortunately, it does reflect the very slow and lazy attitude towards regulating financial misconduct that we've seen from the government over a long period of time.

Labor initiated a Senate inquiry into this bill. That inquiry, led by Labor, proposed the amendments that are being put forward by the government today. The government senators in the other place actually opposed that report where Labor recommended the changes that are before us. Since then, this bill's been languishing on the Notice Paperand, every week, my office looks eagerly to see whether it might be listed for debate and discussion in the House. But the government has refused, time and time again, to bring it on for debate. It is almost as if they've been hiding the bill for fear of what we believe is a commonsense approach to getting fairer outcomes for Australians.

We all know the government's record on these matters. They had to be dragged kicking and screaming into a financial services royal commission. Those on the other side, instead of siding with ordinary Australians, did everything they could to stop the big banks from being subject to proper accountability. They voted against a royal commission 26 times and, instead of fighting for ordinary Australians, they used their energy to push for $17 billion in tax cuts for the big banks. It's very unfortunate that that attitude bled into the way they've handled this bill. This is another sorry entry on the government's appalling record on financial services. It demonstrates a complete lack of judgement by those opposite. It's a government that refuses to lead and, instead, time and time again, as we've seen on these crucial issues of financial services, is actually being led by the opposition.

The amendments will implement recommendations made by Commissioner Hayne which were belatedly accepted by the government after the Hayne royal commission report was finally handed down. The amendments will allow ASIC to properly regulate the products that I've described and help to better protect consumers from harm. They should always have been in the scope of the bill, and Labor pushed the government for months to agree to some accommodation to the changes that we were suggesting. The amendments will bring consumer credit products such as credit cards, personal loans and home loans within the scope of the designer distribution obligations. When you think about it, it is utterly bizarre that, under the government's original bill, banks would have had to prepare target market determinations for a basic deposit account but not for a credit card and a home loan. That's how wrong they got it on the first go. ASIC called for the changes that are being made today, Labor called for the changes and the royal commission backed us in. It was only then that the government folded and said it was going to agree with the suggestions that Labor was making.

The amendments before us will implement two other recommendations that arose from the Labor senators' report from the Senate inquiry into this bill. Under the government's original bill, companies are liable to compensate consumers if they do not review or properly implement a target market determination. However, they are not required to compensate consumers at all if they've failed to make a target determination in the first place. This amendment will fix that loophole. If a company fails to make a market determination when it's required to, consumers will be able to access compensation for any loss as a result. It's only logical that some of these changes be made, and I'm very pleased to be on my feet and supporting the amendments.

The final point I'll make is that the amendments that the government is putting forward today are in part implementing some of the recommendations of the Hayne royal commission. What we've heard from those on the other side of the chamber is that the royal commission is too hard and that we've got to do so much consultation and we've got to wait, delay and obfuscate before we get on and implement the royal commission's recommendations. Well, here we are in the chamber, right before the eyes of the Australian people, starting to implement its recommendations. All that shows us is that if this government really cared about financial services, if they really cared about protecting Australians from the big banks, they would have called the parliament previously and we'd be implementing more of those recommendations right now.

Question agreed to.

Bill, as amended, agreed to.