Katy Gallagher (ACT, Australian Labor Party) Share this | Hansard source

Senator Hume finished her contribution by saying, 'When does this end?' Well, it will end when there is a royal commission into Australia's banking and financial services sector; that is where all the continual inquiries we have been having over recent years should culminate. Labor is strongly of that view. The reason we are debating this legislation on a commission of inquiry, the reason the bill has been drafted, is the complete lack of leadership from the Turnbull government in tackling issues that are publicly well-known—and, we suspect, many more perhaps are not—that are affecting Australians in terms of their interactions with the Australian banking and financial services sector. That is why this legislation is here and that is why we are having a debate: the complete absence of leadership and the seemingly unending protection racket for the banks that this government seems intent on keeping in place.

Labor's firm position is that a royal commission into Australia's banking and financial services sector is the only way to get to the bottom of all the rip-offs, scandals and misconduct we have seen across the sector in recent years. However, in the absence of leadership by the government in refusing to establish a royal commission—and, indeed, arguing that there is no reason for one—Labor is supportive of the commission of inquiry legislation in a very broad sense, subject to going through out normal party processes.

Labor welcomes this bill because it reflects the government's complete lack of action when it comes to standing up for consumers, small businesses and ordinary Australians who have been victims of poor practice, misconduct and scandal across the banking and financial services sector. The message that this bill sends is loud and clear, particularly with those members of the crossbench who have signed on to this approach. In fact, it really is only the Liberal Party and the National Party that are not getting behind this approach here in the Senate.

We believe the Prime Minister needs to take responsibility and call a royal commission . Certainly, Labor will not stop arguing for that. As Prime Minister of Australia, his first responsibility is to stand on the side of ordinary Australians and not continue the protection for the banks and his banking mates. Labor strongly supports a strong, profitable and well-led banking and financial services sector but we do not think that should come at a cost to ordinary Australians. Our decision to call for a royal commission was not taken lightly. It was a decision taken under very careful consideration over a long period of time, and it was in response to the fact that there have been too many scandals, too many examples of misconduct and poor practice. Since we announced our support for a royal commission around a year ago—it was actually probably longer now—more examples of misconduct have come to light. I will go through some of those later in my speech. We need to get to the bottom of the systemic and cultural issues in an independent, thorough and transparent way. We need Australians to have confidence in their banks and financial institutions to uncover and deal with any unethical behaviour that compromises that confidence—and that is exactly what a royal commission would do.

Again, it is important to say that we support a strong banking and financial services sector. It is crucial to our economy. What we will never support is practices, systems and cultures that allow consumers to be ripped off, small businesses owners doing the right thing to lose their livelihoods and retirees to lose their savings. I have spoken to many people who have been affected by banking misconduct since taking over the role of the shadow minister. Their stories are almost unbelievable, traumatic and devastating not just to them but to their families, their livelihoods and their health. It has affected their lives very, very deeply. Some have lost loved ones over this. Families have been rorted out of hundreds of thousands of dollars. Their life savings are gone and they have no access to compensation and no ability to get back what they have lost, often under shonky arrangements with dodgy providers doing dodgy deals. I have met small business owners who have lost everything despite paying their bills on time, paying their debts to the bank on time and having those contracts renegotiated or determined by the banks. They have been called in, having no ability to pay, and have lost everything. Life insurance policy holders have been denied justice. I have spoken to plenty of those as well.

Over the last year, since Labor first called for a royal commission, we have seen around 20 inquiries launched into the banking and financial services sector. They have included inquiries set up by the government to try to deflect attention away from its inaction on a royal commission. They have included those various processes by the Australian Bankers' Association, which admitted recently that the banks had been galvanised to do something after Labor's calls for a royal commission. While any positive change that comes out of these is welcome, these inquiries can only ever be piecemeal. They do not have the powers of a royal commission to investigate and to get to the bottom of what is going on, and they do not have the scope of a royal commission. In relation to the processes by the Australian Bankers' Association, these are inquiries that relate to their members only. Although a number of them are headed by independent and eminent Australians, they are paid for by the ABA and their members. I think there is an argument there around whether they are truly independent reviews. Even Andrew Robb, a former senior minister in the Turnbull government, has said in recent times: 'Let's get on with it. Let's have a royal commission. Let's get it done and restore confidence.' But the Prime Minister is refusing to listen to Mr Robb's advice and respond to that.

If we turn to some of the inquiries we have going on at the moment, there are a number of government-initiated inquiries, parliamentary committee inquiries and industry-led reviews. I note that Senator Hume was using this as an argument to not have a royal commission or, in the case of the legislation being debated today, a commission of inquiry. I would argue that the fact there are 20 various reviews going on is exactly an argument for why we need a royal commission into the banks. The reason we have these inquiries is every single person, every member of parliament and every party knows that there is a problem.

The government acknowledges there is an issue here. They acknowledge it by commissioning various reviews, strengthening the powers of ASIC and providing some more funding. But they acknowledge that there are problems, that customers have been let down and that there has been unethical conduct, misconduct, illegal activity in some cases and failure to protect consumers' best interests. That acknowledgement is there loud and clear in the fact that these various reviews have been commissioned by the government. Labor argues and acknowledges the same problems, but we argue that the vehicle is best met through a royal commission, and other parties support that approach. So let's not pretend that there is not a problem to address here and that everything is hunky-dory. Everybody acknowledges there are issues around banking culture and behaviour which has let Australians down and needs a strong response. We have the various inquiries from the government. The parliament has acknowledged the extent of the problems and instigated various reviews into life insurance, whistleblowers, consumer protection and general insurance. We now have the One Nation Select Committee on Lending to Primary Production Customers. They all acknowledge particular elements of the problem, but there is nothing that looks at it holistically.

We also have, of course, the review of the four major banks that the House Standing Committee on Economics schedules. This was one of the responses from the Prime Minister: to bring the CEOs of the four major banks before the House economics committee, which is chaired by the government and controlled by the government. We have had two of these sessions of the CEOs coming to town for a three-hour session and a cup of tea and then heading off again. The hearings saw each CEO appear before the committee. I think, certainly in the first round and to a certain degree in the second round of hearings, they spoke of very common themes, with very similar answers and very similar approaches: apologies for previous behaviour, acknowledgement of failure to meet customer expectations and promises to do better. But there were examples when the committee asked questions and those questions were not answered, where important reports were not reports and where responsibility for the failures of their own organisations was not really apparent. Adele Ferguson said after the first hearings:

It meant complex questions were impossible to raise and answer, allowing many specific questions to be glossed over, evaded, put on notice or given enough spin to render them meaningless.

The fact is that the government's response has been to bring the bank CEOs in front of a government-dominated committee which can never get anywhere close to the bottom of all of the issues have been raised. The members of parliament, it is clear from the two sessions that have been held, have limited time. The CEOs themselves, highly paid professionals, are professional in their approach but highly skilled in ducking and weaving in those hearings and leave the Australian people completely unenlightened about what is actually going on in the banking sector.

I often hear from people who do not support a royal commission, namely government members, that all of the problems that happened are problems in the past and everything is fine now. Many of the scandals that have wrecked so many people's lives have all been dealt with and the banks are going through their own program of reform and compensation. I think it is worth just having a look at the various instances of banking misconduct that have come to light in just the last 12 months—that is, the ones that we know about. You can go to any month, looking back to January 2016, and see example after example of the banning of bank advisers for misleading, deceptive conduct with Westpac, ANZ, NAB or Commonwealth Bank, and the banks having to pay millions of dollars in compensation whether it be for bad credit limit practice, breaching responsible lending laws and other penalties imposed by ASIC. Of course, banks had to refund $20 million here and $29 million there and there is the ASIC report into fees for no service. It is a staggering $180 million having to be paid back as compensation by AMP, ANZ, CBA, NAB and Westpac, because they failed to do the right thing by their customers. The report revealed that Australia's biggest bank has spent years charging over 200,000 customers fees for services they never received. The bank had to return $180 million to customers because of that seemingly 'standard practice'. It was not until they were caught out that they had to change their ways.

In terms of the job that I have been doing, going around and talking to people, the personal stories of how banking misconduct has affected individual lives have been the most difficult to listen to. I sat down with people who had done no wrong other than that they wanted to secure their financial future and were preyed upon, often by shonky financial planners or advisers, and then let down by the lending institution who doctored their documents or did not check the information properly or changed a few digits here so that they could lend more money to people who clearly could not afford it to get them involved in deals, lending and investments that they did not understand and did not know and were, in some cases, told the complete opposite. People who put trust in the professional advice they were getting have been screwed over and have lost everything. It is difficult to listen to a 70-year-old woman tell you that she has had to go back to work part time and her husband, in his early 70s, is not well and is still working, because they lost all of their super. They owe the bank hundreds of thousands of dollars and the bank wants to take their home to pay for it. What do you say to them? 'Don't worry. The bank is coming to the House's economics committee. They come down, and we ask them the tough questions, and then after three hours they all walk off again.' How can you say that to somebody who is working as a cleaner, because they have lost everything? You can't. These people often do not expect to get that money back when they are talking with me. They understand and feel guilty, because they signed a document at some point that holds them legally liable. They do not actually even feel like they can make a fuss about the fact that they were duped into losing their life savings, but they want to make sure that it does not happen to anyone else. They definitely want to see that. They do not want anyone else to have to go through what happened to them. They also want to make sure that, in the future, there is a fair hearing for people affected and that, if they are affected by banking misconduct, there are appropriate avenues to have that dispute heard.

Labor will continue to fight for a royal commission because of stories like that. From stories like that, there has to be an answer from the parliament to say that what happened to you is wrong and we can fix it, but we need to understand exactly how it happened, why it happened and how it can be stopped from happening again.

We have had inquiries going back some years now into this. The Senate Standing Committee on Economics for one has heard inquiry after inquiry, but nothing changes. Banks still get fined. You still have ASIC coming out and telling them that they should pull their socks up. Nothing changes. Senate committee inquiries are useful. They can pull out issues, identify issues and give a voice to those people that are affected, but they do not have the powers of a royal commission or, in this case, a commission of inquiry that would have significant powers to call for documents and take evidence, in camera or otherwise, to get to the bottom of what needs to be uncovered so that we can restore faith in Australia's banking and financial services system.

I agree with Senator Whish-Wilson when I hear the only argument put to me by banks when I ask them: 'Why do you fight so hard not to have one? Wouldn't it be in your interests, considering the 20 various inquiries underway? Wouldn't it be in everyone's interests to just have a royal commission and focus on the terms of reference and have it run as efficiently and quickly as possible and not necessarily stop all the other reforms,' as Senator Hume has argued?

They say it will shake confidence in the system and that is going to be bad. I say that confidence is shaken, well and truly, and the only way to restore that trust and that confidence is to allow a process that the Australian people have trust in and that they know is truly independent and has available powers similar to those of the judiciary to allow scrutiny and uncovering of those issues to occur. That is why we will continue to argue for one.