Anne Stanley (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Financial Accountability Regime Bill 2023 and accompanying bills. Australia has an incredibly robust and well-developed financial sector that has grown considerably since the 1990s. The combined total assets managed by financial intermediaries is now around $2.3 trillion, 250 per cent of Australia's GDP. With the financial sector contributing nine per cent of gross value added, it forms a large part of the economy, and a loss in trust could cause flow-on effects to both the economy and consumers. In 2008 we saw the detrimental effects that a crisis in the financial sector can have, not just for the economy but the entire world. Australia had only narrowly avoided an economic recession in 2008-09 but this was due to the economic management of the Rudd government. The uncertainty caused the level of anxiety that had not been seen the nineties recessions. We saw the effect in other countries, where people lost their homes, banks and businesses failed, unemployment rates skyrocketed and it did take years to recover.

Trust and stability are the foundation of the global economy. Entire sectors, including the financial sector, are built on those principles. We are seeing it today in the US and Europe, where a loss of trust has caused a bank run, leading to failures and stock sell-offs, creating knock-on effects across the sector. The government has a role to play in ensuring that people trust that their money is not only safe but also that they are protected from unethical and illegal behaviour.

The 2017 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established after a series of scandals in the sector that undermined trust in our financial sector. Australians interact with the sector on a daily basis, whether it is for regular tasks or for life-changing decisions, like buying a house. The misconduct that was revealed by the royal commission was found to be systemic. The reason as to why this has happened, Commissioner Hayne concluded that the answer seems to be greed, the pursuit of short-term profit at the expense of basic standards of honesty. The actions of those responsible undermined the trust of the Australian people. It should not have happened and it should not happen again.

The Australian government has responsibility to regulate, while those in the sector should be held accountable and responsible for ensuring this doesn't happen again.

Whilst the report was handed down in 2019, the Albanese government is committed to finalising the response to the recommendations. Last year legislation was introduced and passed, and today the legislation being debated is a continuation on that commitment. These bills are designed as a response to several recommendations. The first set of bills will establish the Financial Accountability Regime, the FAR, implementing five recommendations made by the royal commission. It will take a systemic change to address the issues highlighted by the royal commission, and it must be from top to bottom. The FAR is a strengthened responsibility and accountability framework for financial institutions and their directors, including the most senior and influential executives. It will apply to banks, insurers and superannuation entities. It is not enough to be reactive, because the damage in most cases will have already been done. People's lives will have already been ruined, and sometimes no amount of compensation can fix that. This is not just a financial impact. There is a devastating mental health aspect to situations that must also be considered.

Those at the top must be proactive in ensuring that their institutions comply with the laws that cover them. The FAR will require them to take reasonable steps to prevent breaches. In the event that they do not meet these requirements, regulators will be empowered to disqualify accountable persons and impose substantial fines on financial institutions. Those people who breach their accountability obligations will face serious financial consequences, with their remuneration reduced.

It is important that poor behaviour is deterred, and that's what these changes will do. But if those at the top continue to engage in bad practices then they should be dealt with appropriately. We know that these changes will need to be considered by the sector and they will have to have time to ensure that they can fully comply with the new obligations, with the FAR applying to the banking industry six months after royal assent and 18 months after royal assent for insurance and super entities. These measures will ensure, on one hand, that those at the top of these institutions are accountable and responsible and, on the other, that the sector can maintain its efficiency. Improving the trust and stability of the sector will be beneficial both for these industries and for the Australian economy.

In response to another recommendation of the Hayne royal commission, the second set of bills being debated today will introduce the compensation scheme of last resort. In the event that the Australian Financial Compliance Authority, AFCA, determines that a consumer is entitled to compensation, they should be compensated by the relevant financial institution, and in many cases they will be. But the CSLR will ensure that, if they can't, then Australians can still receive compensation of up to $150,000 for unpaid AFCA determinations in their favour for financial services or products that include personal advice on relevant financial products to retail clients, credit intermediation, securities dealing and credit provision.

This is an important measure that was recommended because of the inadequacies of other redress schemes. It's only fair that Australian consumers are compensated in the event of large financial failures. However, measures have been added to ensure that firms do not rely only on the CSLR, because it is, as the name implies, to be used only as a last resort. The government should not be responsible for a financial firm's failings, and if the CSLR provides compensation then ASIC must cancel the AFCA member's Australian Financial Services Licence and/or Australian Credit Licence.

The funding aspect of the CSLR is another crucial element of these bills. The Commonwealth, on passage of these bills, will fund the operational costs from 23 December until 30 June 2024. But, importantly, the costs from 1 July 2024 will be fully funded by an industry levy, and the backlog claims will be funded through a one-off levy on the 10 largest banking and insurance companies in Australia. Taxpayers won't be paying for it. The CSLR must be financially stable and sustainable while also ensuring that the sector can account for the levies, which is why there will be a subsector cap of $20 million and an overall cap of $250 million. However, this legislation accounts for those situations where a large financial institution fails and there are larger than expected expenses, with the minister having the power to issue special levies. The failing of a large financial institution would be detrimental, and we hope it doesn't happen, but the last few years and the 2008 financial crisis have shown us we should be prepared for all eventualities.

For the CSLR to be operational and compensating consumers from December, these bills should be passed this month. With their passing, the Albanese government will finalise the federal government's response to the Hayne royal commission. Australians deserves a financial sector that is ethical, and the Australian government will ensure that it is. The Australian people and our financial sector will be much better off for it.

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

I rise to speak on the Financial Accountability Regime Bill 2023, the Financial Accountability Regime (Consequential Amendments) Bill 2023, the Treasury Laws Amendment (Financial Services Compensation Scheme of Last Resort) Bill 2023, the Financial Services Compensation Scheme of Last Resort Levy Bill 2023 and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Bill 2023, which together establish the Financial Accountability Regime, extend the existing Banking Executive Accountability Regime, the BEAR, and, of course, establish a compensation scheme of last resort. Clearly, I'll be talking to the amendment moved by my colleague the member for Hume, which goes to the very heart of the dysfunction, the distraction and the priorities of the current Labor government and, in particular, our favourite minister, the Assistant Treasurer.

But, first, I go to the substantive bills. I note that, as the Assistant Treasurer admitted in his own contribution, this is not the first time that the House has dealt with these bills. In fact, the Assistant Treasurer introduced these bills last year and, as is becoming his trademark, completely stuffed it up. Just like trying to hide transparency in super, he stuffed up. Just like trying to carve out certain super funds from adhering to performance tests, he has stuffed up again.

It's worth going through some of the history of these stuff-ups, as they pertain to why we're back here debating these bills a second time, and it's worthwhile putting on record not my words but the words of the Australian Financial Review no less and just what they think of the Assistant Treasurer. You could call me biased; it is hard for the parliament to call the Australian Financial Review biased. Remember, the Assistant Treasurer sits on the Expenditure Review Committee. He is the Treasury's righthand man for development of the budget. No wonder Australians should be slightly perturbed at the budget coming up. The headline of the article is: "Steven Jones is out of his depth". I couldn't agree more with the AFR. The article starts:

Across an otherwise competent frontbench …

I don't agree with all of that. But I digress slightly. It goes on:

… the Albanese government's Assistant Treasurer Stephen Jones stands out like dog's balls.

I was quoting directly from the AFR. I'll continue:

In the six months since he took charge of the ministry, the Member for Whitlam has chewed up the furniture, rubbed his bum on the carpet and cocked his leg over his parliamentary colleagues, the financial sector and the voters of Australia.

So what was the AFR referring to? It was referring to the last time that the hapless Assistant Treasurer introduced these bills into parliament. And here we are again.

The last time these bills came here we were expecting the bills to go through as non-controversial. In fact, we were supporting the bills. I had informed the Assistant Treasurer of that personally. But, as per the AFR, something went wrong. Something always goes wrong with this Assistant Treasurer. Shock! Horror! The Assistant Treasurer completely stuffed it up. No wonder there's the quote from the AFR that he stands out like dog's balls.

He took initiative. It was very dangerous—I'm quoting, Madam Deputy Speaker.

Michelle Ananda-Rajah (Higgins, Australian Labor Party) Share this | Link to this | Hansard source

Member for Fadden, I would caution you on parliamentary language. I know you were quoting from a piece of newsprint, but it does not need to be read out if it is unparliamentary. It demeans this house.

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

Thank you, Madam Deputy Speaker. I will go back to the Assistant Treasurer. He took initiative. That is very dangerous from my point of view. The Assistant Treasurer tried to do a deal with the Greens. In fact, the Greens said he did a deal. He was agreeing to their demand to increase fines associated with this legislation so the Greens would continue to support his desire to hide how much Labor and the unions rake in from super funds. It was a dodgy deal that was not done cheaply. In fact, it blew up in the Assistant Treasurer's face. His masters, the Prime Minister and the Treasurer, didn't agree—quite rightly—so he had to renege on the deal. Now the Greens, like the rest of the country, don't trust the Assistant Treasurer.

The Assistant Treasurer tried to hide how the average Australian's hard-earned savings are being spent on funding Labor and the unions. He tried to allow super funds to act in the interests of the fund managers, not the Australians whose savings are being looked after for retirement. He did everything he possibly could for the union super trustees—everyone except those he needed to help: Australians, who deserve the best return for their investment in super. In the end, every single member of the House and the other place, bar Labor members, voted against what the Assistant Treasurer was doing on the transparency measures for super.

Well, the leash has tightened. We're now told the poor, hapless Assistant Treasurer can't even leave the ministerial wing without letting the Prime Minister or the Treasurer's office know. The AFR article goes on:

Jones' priorities in office have been nothing short of bewildering, such as bending over backwards for small superannuation funds like the $3.6 billion First Super, chaired by CFMEU heavy Michael O'Connor, which celebrated the Assistant Treasurer's planned review of regulatory attempts to kill off small funds (First Super's $10.8 million in non-donation and non-gift payments to political entities over three years most certainly played no part in such a move!).

The article concludes with this:

In case Anthony Albanese—

I'm quoting, Madam Deputy Speaker—

is serious about protecting the country's best financial interests, we're glad to assist in pointing out who are his assets and who are his liabilities.

I don't think there are any assets, but certainly the Assistant Treasurer is a massive liability.

All these months later, here we are back in the House dealing with the same legislation—bills that should have been dealt with a year ago because the opposition gave them bipartisan support. I've been here for 15 years. I can't think of a single other bill where the opposition has given unqualified bipartisan support and a government minister has managed to stuff up so badly that the House has had to come back to deal with the bill a second time. It certainly is a record of incompetence that I don't think has been surpassed.

We have a strong financial services sector in Australia. It's one of the bedrocks of this country, and we want it to remain that way. It's been remarkably strong over the last decade and, as my colleague the member for Hume said:

We will not delay the progress of these bills through the parliament … But we must note … the government's continued mismanagement of its legislative agenda … its broken promises on tax and superannuation and its failure to respond to the challenges that Australians are facing every day.

… Whilst our financial services system has served us well, we can't ignore that the royal commission was necessary. We called it—the coalition called it. We committed to implementing its recommendation to take action on all of the 76 recommendations and additional commitments contained in the final report of that royal commission. Significant progress has been made, and the long road to implement these changes is now reaching its conclusion. With the re-introduction of these bills, the last of the legislative commitments to implement the royal commission's recommendations will indeed be completed. The coalition welcomes the introduction of and the government's decision to retain the primary Financial Accountability Regime and the compensation of last resort legislation, largely in the same shape and form.

I have a couple of comments on the financial services compensation scheme of last resort. We introduced this legislation to facilitate the payment of compensation to eligible consumers who have received a determination from the Australian Financial Complaints Authority, AFCA, which remains unpaid. This forms part of the final tranche of the legislation to implement recommendations of the royal commission. But there's a key part missing. Part of the Hayne commission recommended commissioning a review into the quality of financial advice …

That review was commissioned by our government and is now gathering dust somewhere in this hapless Assistant Treasurer's office.

Australia is in the middle of a cost-of-living crisis. The cost of everything is going through the roof. Being able to plan for your financial future right now is more important than ever. For over 50 days, this government sat on a review with recommendations that, if implemented, would make obtaining financial advice easier, cheaper and better for Australians. Not least, it would make the financial services industry better. Financial advice professionals deserve to be able to work in the best interest of Australians without one hand being tied behind their back through overburdening regulation.

The Labor government, when in opposition, used to literally scream at the previous government about releasing reports. The Hayne royal commission report, they said, 'must be released immediately'. We took 2½ days over the weekend to look at it and released it the following Monday. This Labor government took 50 days to consider the report of the Quality of Advice Review, the Levy report, only to release it and then announce that they were going to consult on the consultation. 'Hypocrisy' doesn't even come close to describing the actions of this government when it comes to these key areas of recommendation from the Hayne royal commission. We don't even have a time frame for this consultation on a consultation or when it will end. Both financial advice professionals and Australians enduring a living crisis are crying out for reforms and cheaper financial services advice.

I have already informed the government that the coalition will support legislation to implement the reforms in full as recommended right now. The government needs to get on with it. By delaying the implementation of Dr Levy's recommendations, the Assistant Treasurer and this government are denying Australians the opportunity to seek affordable, quality advice at a time when Australians are already finding it tough to meet cost-of-living challenges. This is, frankly, the Labor government squibbing it. The Assistant Treasurer is seeking consultations upon consultations. As we have seen since the Assistant Treasurer started in this job, everything he touches stuffs up. If he can't get on with the job of delivering for Australians, and not for those masters in the union movement, it is time the Prime Minister stepped in and put in someone competent who can.

Australians need financial advice now more than ever. The reason is that promises are being broken by this government. The Prime Minister has already broken a promise not to touch super. What's next? How about tax on your family home? The Treasurer didn't rule it out initially, which caused the Prime Minister to step in, on interview, to clean up the mess. How can everyday Australians trust this mob? Labor have already broken one promise not to raise taxes. Who's to say that, having crossed the Rubicon, they won't do it again? These broken promises go to the integrity of this government that would say one thing crystal clear before the election and the complete opposite when they came in. It is Peter Garrett-esque: 'Once we're in, we'll change it all.' Australians are right to be wondering what Labor will tax next. How can Australians trust the government when they say one thing before an election and do something diametrically opposite so soon after?

We will not deny this bill a second reading. We call on the House, clearly, to recognise the mismanagement of this bill, the government's dishonesty with the Australian people and the need for the government to commit to reducing pressure on inflation not only by controlling its own spending and by not taxing Australians more but by getting on with legislating the Levy review so Australians can have cheaper access to financial services. I support the amendment moved by the member for Hume and commend the bill to the House.

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

It may seem like a distant memory now, but only four years ago, the royal commission into the banking sector was dominating the headlines. On almost every day of the hearings we heard about new ways that financial institutions, including the big four banks, were ripping off their customers. This bill, the Financial Accountability Regime Bill 2023, seeks to implement one of the recommendations of the royal commission for the current banking accountability regime to be extended to all large financial service providers.

I would have thought that the key part of this was accountability, but Labor's mates in the banking lobby have made sure that this bill is about accountability in name only. Astonishingly, the bill does not provide for fines for wealthy bankers who have breached their accountability obligations. Instead, the only consequences are that some of their bonuses get revoked—Oh dear! Poor them; their poor bonuses. The government had initially listened to Greens concerns about the lack of accountability and agreed to maximum fines of $1 million for bankers who breached those obligations, but they backflipped on that after pressure from the banking lobby. Sadly, this is way too familiar a tale with this government.

Who is the banking lobby, you may ask? The CEO of the Australian Banking Association is none other than former Labor premier of Queensland Anna Bligh. Not content with privatising many of Queensland's public assets during her time in office, she continues to work in the interests of big corporations over everyday Australians as a mouthpiece for the banking sector, using her direct ties to key Labor personnel. This is a prime example of that revolving door between government, lobbyists and business, that absolutely foregrounds commercial interests over those of everyday Australians. The connection between the banking lobby and the Labor Party, along with the thousands of dollars in donations provided to the Labor Party by the banking sector for the election, seems to be proving very effective, given that this backflip on fines happened after just 24 hours—quid pro quo indeed.

The Australian people are not stupid. They can see these connections and see how cheaply the government can be bought. When asked about this backflip, the minister has said he didn't consider the potential effects on small banks. Great—well why isn't the minister open to just carving out an exception for small banks? Is it because perhaps this is a thinly veiled excuse for bowing to banking lobby pressure?

This is all happening in the context of a cost-of-living crisis, with rising interest rates and huge profits in the banking sector, which is a major cause of inflation. The big banks benefited massively from the low cash rate during the pandemic by accessing $144 billion in wholesale funding from the Reserve Bank. They are now seeing record profits off the back of this. Meanwhile my office, and I'm sure electorate offices around the country, are getting calls and emails daily from mortgagees directly affect by rising interest rates and renters who are indirectly feeling the pinch from rising rents as well, many being priced right out of the rental market and at grave risk of homelessness. Here we have direct transfer of wealth from struggling everyday Australians to the big banks. This is an abomination. It's clear that this isn't going to change under a government so clearly under the influence of the banking lobby.

Andrew Wallace (Fisher, Liberal National Party) Share this | Link to this | Hansard source

Australia can be proud and should be proud of a strong financial services sector that is operating in this country. It boosts productivity, bolsters businesses and supports aspiration. This sector helps Australians to realise that great dream of home ownership, starting a business, raising a family and retiring in confidence, security and comfort. Our financial services sector has weathered the storms of global conflict and supply chain issues. It has endured the sharpest economic decline in generations, thanks to global pandemic. And while populist leaders imposed financial measures which dragged nations left, right and down, the previous Coalition government's calm and steady economic management, in cooperation with financial services not against them, meant that Australians were insulated from a large part of the economic challenges.

We've seen this play out at the local level as well. My electorate on the Sunshine Coast has reaped the reward of a strong finance sector. Core and contributory financial services employ nearly 4,000 Sunshine Coast locals. That's 4,000 Sunshine Coast residents in work because of sound economic management. Thousands of households are better off because of the coalition's hard work between the day Labor was turfed out of office and May 2022. It's a sector which adds just shy of $833 million to our local Sunshine Coast economy through 1,400 businesses. That is nearly $1 billion flowing through local small businesses and local supply chains into the pockets of hard-working Australians.

A strong financial services sector is an essential cornerstone of Australia's resilient and adaptable economy. It's important that it stays this way. That's why I'm pleased to speak on this package today. I'm especially pleased that once again this comes on the back of the coalition's hard work. In many ways, this is another coalition carbon-copy piece of legislation. As families and businesses in Fisher know too well, a coalition carbon copy is the only kind of carbon policy Australians wanted to hear about from this federal Labor government—not a carbon tax, not a climate warrior training program, not taxes, tariffs, pledges or platitudes. They want sound economic management to lift them out of Labor's cost-of-living crisis. That means we must support our financial services sector by promoting integrity, clarifying accountability mechanisms and putting an end to Labor's dithering and delays. To that end, the coalition will not delay the progress of the bill through parliament.

The legislation we're debating establishes a financial services compensation scheme of last resort for victims of financial misconduct. It also expands the Banking Executive Accountability Regime, the BEAR, more broadly across the financial services industry under the Financial Accountability Regime, the FAR. This legislation forms the final elements of the response to the landmark Royal Commission into Misconduct in the Banking, Superannuation and Finance Services Industry. The coalition committed to taking action on all 76 recommendations and additional commitments contained in the final report. This was a response and royal commission launched by the coalition when we were in government, and we're happy for Labor to continue our work. It just shows that only the coalition has a plan for our economy, only the coalition has a plan for Australian industry and only the coalition has a plan to create more jobs and put more money back into the pockets of hardworking Australians.

This Labor government has lost control of its ability to govern. We saw it this year with the mishandling of the previous version of this legislative package. These are bills which the coalition put forward before the election. One would think these would be straightforward pieces of legislation, but apparently not. That this is the second time we're debating this is proof of that. Last year, without consultation or warning, or even a media release, the Assistant Treasurer chose to unilaterally implement $1.1 million worth of fines on executives in the financial services industry. We're not just talking about the executives in big-city, top-level offices; we're talking about local credit unions, cooperatives, regional banks and small lenders. When they were promising their way to the halls of power, this federal Labor government promised that they would work with the private sector. They promised that they would consult. They promised that they would listen. Every step of the way, small and family businesses and industry have been shut out of this conversation. They have been cast aside, now that the election has been done and dusted. They have been kept in the dark on crucial issues of workplace relations and the Labor government's agenda. Those opposite promised certainty and collaboration, and they've delivered instability and isolation. Week by week we're treated to farcical debates from those opposite on half-baked bills. That's if they don't copy ours. Even when they do copy coalition policy, they struggle to bring it to the finish line.

The way this legislation has been handled is another example of this incompetent, indifferent and ignorant Labor government fumbling its way through the dark. Once again, it takes the coalition to turn on the lights, it takes the coalition to clear the way and it takes the coalition to shine a light on another dropped ball, another failure in leadership from the Albanese government. You can't bind a small business in red tape without warning and then rip it off because you've changed your mind. That kind of ineptitude destabilises industries, cripples companies and hurts Australians' wallets. It does what we see Labor's dithering is doing today. It exacerbates the cost-of-living crisis that Australian families and their businesses are contending with. Certainty and cooperation are the foundation of good economic management. They promised consultation, and instead we're getting absolute chaos.

The government has resolved several of the issues which the coalition raised when the legislation was first brought before the parliament. The reckless deal they struck with the Greens to impose civil penalties, only to then backout of it, remains excluded. The bill now extends the payment period for the compensation scheme of last resort one-off levy, giving the top 10 financial services organisations two years to pay this one-off levy. This is an important step if we want to provide certainty for our largest institutions. After a lengthy and extensive campaign from this side of the House calling on the Labor government to do their job and consult industry stakeholders, we are pleased that the sector has now finally been heard.

Along with the Financial Sector Reform Bill, the legislation contains a number of provisions which will impose four core sets of obligations on accountable entities. The first, accountability obligations; second, key personnel obligations; third, deferred remuneration obligations; and forth, notification obligations. Most notably, the package extends the Banking Executive Accountability Regime, the BEAR, to all entities regulated by APRA. This means that banking, insurance and superannuation entities and directors will be subject to the same accountability and the same transparency standards required of financial entities covered under the existing regime.

The package also establishes the levy framework for and function of the compensation scheme of last resort. The CSLR will provide compensation to eligible consumers where they have an Australian Financial Complaints Authority determination in their favour and where the relevant financial firm has not paid the consumer in accordance with the determination. The framework also imposes a levy to fund the CSLR on an ongoing basis. It will lead to the introduction of an annual tax to be levied against relevant entities, as well as a one-off levy to be imposed over two financial years to pay for the backlog of claims from AFCA. The CSLR forms part of the final tranche of legislation to implement the coalition government's response to the Hayne royal commission.

When I was the chair of the corporations and financial services committee I had some pretty grave reservations about the introduction of a compensation scheme of last resort, and quite frankly I still do. We need to be very careful that government doesn't just keep stepping in on all occasions saving people from themselves. Some people will make poor decisions. Some people will make poor decisions based on poor advice. What we need to be careful of in this country is that we don't try and de-risk everything, because ultimately if we try and de-risk everything we demotivate the concept of investment. Everybody would invest if there was no risk, but the likely rewards from those investments, in my view, are likely to be diminished as a result. And of course, we also have the costs of paying for the levies. Let's not be naive about this, the levies that will be paid by the relevant institutions—ultimately it's the punters that're going to pay for these things through increased charges. So whilst I support the legislation, as does the coalition, I just want to put it on the record that I have had concerns and I still have concerns about the concept of a compensation scheme of last resort. Where unscrupulous operators give poor advice and are not in a financial position, either them or their insurers, to be able to provide assistance to people who have been impacted upon, then, sure, it's not a bad thing. But there are broader implications for the broader economy here. I just make this point again: you can't deleverage risk from our world. We need to be very careful about how we try and do that. There is risk in everything. I think we as legislators need to be very mindful of that.

In conclusion, financial services are afforded a significant amount of trust by Australians, sometimes at their most vulnerable. They have a duty to return on that goodwill with quality service, accurate advice, sound risk management and good governance. In the past, some of these services have failed in that duty. We've all heard the evidence from the royal commission. That is why we initiated it. That's why we responded. That's why we put this legislation forward when we were in government.

Australians also put a significant amount of trust in their government, as they do in their banks. The banks have got a long way to restore Australians' faith. I say they have got a long way, not come a long way. They have come some way, but they've still got a long way to come. Australians expect quality service. They expect sound economic management. They expect good government. This federal Labor government is failing in that duty. They don't have a plan for our economy, so they are using the coalition's. It's taken them two fumbled attempts just to get it back on track—with our support, no less. Labor have demonstrated in 10 months that their priorities are out of whack with everyday Australians. They are hopelessly out of touch with the needs of Australian families.

They are patently out of their depth, with their arrogance, incompetence and indifference to the struggles of real Australians, especially in regional Australia—the same Australians that talk to me in my electorate of Fisher about how they are struggling from day to day. Everything has gone up. Electricity has gone up. Gas has gone up. Rents have gone up. Mortgages have gone up. The cost of groceries, or simply walking into a supermarket, has gone up. When was the last time you walked into a supermarket and paid under $100 for only a few groceries? This government needs to get real about the cost of living, and it needs to start pulling the right levers to assist families around Australia.

Jenny Ware (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in support of the Financial Accountability Regime Bill 2023 and related bills which have been brought to this place to implement some of the recommendations of the royal commission into the banking industry. At their highest level, the bills do two things. Firstly, they introduce the Financial Accountability Regime, which, for ease of reference, I will call the FAR. Secondly, the bills introduce a compensation scheme of last resort to provide compensation to victims of financial misconduct in certain circumstances. The other two bills are largely consequential and relate to timing of the FAR and the compensation scheme. I don't intend to speak in detail on those.

Both I and the coalition considered and supported a variation of this legislation in September last year. Indeed, the history of this proposed financial regime is that both the former Morrison government and the Albanese government have made previous attempts to establish the FAR. The bills introduced by the Morrison government lapsed at the dissolution of the 46th Parliament, and the previous bills introduced by the Albanese government in September 2022 have now been withdrawn and replaced with the current bills.

As I understand the reason for the withdrawal, the Assistant Treasurer and Minister for Financial Services, who had carriage of the bills, seemingly mismanaged the process and convinced his government to agree to amendments put forward by the Greens party. These introduced harsh individual penalties for banking executives, and the changes would have applied in the same way to credit union CEOs as CEOs of the major banks. The changes were going to cause deep uncertainty in the financial services sector. So this government, embarrassingly, had no recourse but to withdraw legislation from the Notice Paper and has now reintroduced the new financial service packages with changes. It appears now that the Assistant Treasurer and the government have indeed learned the lessons of taking advice from and negotiating financial legislation with the Greens.

By way of background, the proposed regime has arisen from the former coalition government's response to the recommendations of the banking royal commission in February 2019. While the COVID-19 pandemic saw a delay in its implementation, the bills were then introduced to the last parliament in late 2021. The bills on which I speak today are largely identical to the legislation introduced by the coalition government, and for that reason I commend this government.

The first part of the bills establish a financial accountability regime, the FAR, to increase transparency and accountability across the financial services industry. The FAR will replace the existing Banking Executive Accountability Regime, the BEAR, and imposes four core sets of obligations on authorised deposit-taking institutions, insurance companies and superannuation funds. To this end, the bill imposes four fundamental sets of obligations upon these organisations.

First, there are new accountability obligations, key personnel obligations, deferred remuneration obligations and new notification obligations. Most notably overall, these bills do reflect that chief executives of the financial services industry will now be more accountable, and that is appropriate. I will just turn briefly to accountability and its history within the financial services industry. There's been a growing perception, particularly since the 2008 global financial crisis, that senior executives of financial institutions have not been held accountable in circumstances where numerous financial scandals have harmed the community. The BEAR puts in place a strengthened accountability network for the senior executives of the authorised deposit-taking institutions. These are our banks, our credit unions and our building societies. However, the BEAR does not apply to financial institutions outside the banking sector. For example, the accountability obligations set out in the BEAR do not apply to senior executives of insurance companies or superannuation funds. Therefore, the bills propose to give effect to the government's commitment to implement that recommendation of the banking royal commission which was to extend the scope of the BEAR to all APRA regulated entities. Again, this is supported.

The second major part of the new financial regime is that the bills propose to establish a compensation scheme of last resort. This scheme will provide compensation to victims of financial misconduct who have received a determination in their favour from the AFCA, the Australian Financial Complaints Authority, but have not been paid, typically because the financial institution involved in the misconduct has become insolvent. This does not happen very often, but when it does it is very important that victims of those funds do receive compensation. Again, this was a recommendation that came out of the banking royal commission. The proposed scheme of last resort is limited in its scope, in that, firstly, it applies only to unpaid AFCA determinations. The maximum compensation for each AFCA determination is capped at $150,000. The compensation scheme will consider claims for unpaid AFCA determinations if the financial complaint was made to AFCA after 1 November 2018, which was the date that AFCA commenced its operations. Lastly, the scheme will provide compensation to unpaid consumers who've experienced financial misconduct in relation to the following four types of financial products and services: personal advice, credit intermediation, securities dealings for retail clients or credit provision. So there are limited opportunities for the scheme to be used. However, the purpose of it is to ensure the resolution of disputes within the financial system in order to safeguard consumer trust and confidence and to ensure that our financial system is meeting the needs of its users. Coming out of the royal commission was evidence that current arrangements are failing to meet this expectation for Australian consumers, with some consumers and small businesses not receiving compensation to which they should be entitled.

I should say, the majority of financial firms within our country comply with their legal obligations and compensate their clients or their customers when required. One of the other advantages of the compensation scheme is that it will be industry funded. Therefore, when victims of financial misconduct are unpaid due to a financial institution's insolvency, it is up to the rest of the financial services industry to meet the shortfall by way of an annual levy to fund the CSLR. For the first year of its implementation, the government will provide the funding. Then, from the second year onwards, it will be industry funded. To conclude, these bills, if passed, will implement recommendations of the banking royal commission into both the financial accountability regime and also the compensation scheme of last resort. Both of these recommendations were supported by the former Morrison government and by the Albanese government.

The other two bills that are referred to in the package, which are largely consequential upon the establishment of our entities, relate to timing of payment, collection of levies and the like. So for all of these reasons, it is important that we have trust in our financial services industry. Largely, most operators within our financial services industry are scrupulous; however, in order to maintain integrity and to restore Australians' faith in our system, I commend these bills to the House.

Max Chandler-Mather (Griffith, Australian Greens) Share this | Link to this | Hansard source

ER () (): It took Labor a day to renege on a deal struck in good faith with the Greens to introduce million-dollar fines for bankers who break the law. But I thought it would be worth referring to how the Australian Financial Review reported Labor's reneging on a deal because, in many ways, the first two paragraphs speak to everything that is wrong with Australian politics. The headline reads 'Banks force Labor to rethink on $1 m executive fines.' The article says:

Banks have forced the Albanese government to put off the vote on a bill to lift accountability in financial services, with Labor now rethinking a last-minute deal with the Greens that would have added million-dollar fines for law-breaking financial service executives.

The banks, led by former Queensland Labor premier Anna Bligh, warned the move to put individual fines back into the Financial Accountability Regime (FAR) would have unintended consequences for lenders.

We have an extraordinary situation where a former Labor Premier, now head of the banks, can lead a lobbying effort to overturn a good-faith deal to introduce what I would argue the vast majority of the Australian public would think is pretty straightforward, which is that bankers that break the law should face consequences. We have here an extraordinary example of how power works in this country and who ultimately this government works for, which continues to be the big banks and multinational corporations. You only have to look at the fact that, as people's mortgages go up, people are being evicted from their homes because they can't afford the rent. People—pensioners, low-income residents, even teachers or nurses—are having to make tough choices between paying the bills, feeding the kids or paying housing costs, at the same time as banks like the Commonwealth Bank post record profits of $5.15 billion. We have chronically underfunded schools and hospitals. We have a situation where the government can find $368 billion for nuclear attack submarines but not a single extra cent to lift people out of poverty, or for public or affordable housing, but a banking lobbyist can walk into parliament and get what they want in a day. So why is it that a teacher or a nurse or a low-income resident can't walk into parliament and get the same thing? Why is it that the government will listen to the banking lobby?

Hon. Members:

Honourable members interjecting—

Max Chandler-Mather (Griffith, Australian Greens) Share this | Link to this | Hansard source

I hear interjections. Even here, where usually there isn't that much colour and flavour, even here you hear Labor members opposite strenuously defending their decision to back down on the million-dollar banker fines. What's your response to that? What's your response to saying, 'We will roll over for the big banks and cut million-dollar fines when they break the law'? What do you think should happen to them when they break the law? But at the same time you won't stand up for the millions of people in this country who are in need of cost of living relief. You won't stand up for the people who are watching as this government hands $368 billion to the US and the UK for nuclear attack submarines that we are going to get in three decades, but they can't build enough homes to tackle the housing crisis. They can't fully fund our public schools. They can't lift people out of poverty. There are still people having to live on $48 a day, by the way, pensioners still living above the poverty line. You are willing to roll over for the banks in a day, but you can't stand up for the people that you're meant to represent in this place. How often do we see this from this government? Again and again and again. Labor will roll over for the banks, but they won't stand up to the rich and powerful, who are the ones right now making people's lives tough in this country.

Really, when it comes down to it, you only have to look at where the profit is going and where the misery and the terrible cost of living burden is going. While the Commonwealth Bank records a $5.15 billion record profit, rents have skyrocketed, mortgages have skyrocketed, the cost of living has skyrocketed. We know that the Australian Institute found that multinational corporations increased their profits above increases in expenses by $160 billion. The government can't bring themselves to introduce a super profits tax and use that money to actually provide serious cost of living relief, but they will roll over for the banks in a single day.

This incident, reneging on a deal struck with the Greens, speaks to everything that is wrong with Australian politics. We will be moving a third reading amendment. You will get a chance to stand up and explain to your constituents why banks shouldn't be fined $1 million. I'm really looking forward to that, actually. It really reminds me of why so many people are fed up with politics and politicians. I'm sure a lot of them would love you to explain why bankers should get an easy ride and they should get a tough one.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

The immediate question is that the amendment be disagreed to.

Question agreed to.

Original question agreed to.

Bill read a second time.