John Williams (NSW, National Party) Share this | Hansard source

Neither of us are socialists. Anyway, we were in Senate estimates and I asked ASIC Deputy Chair Peter Kell: 'Why did it take you 16 months to act against Commonwealth Financial Planning after a whistleblower'—namely Jeff Morris, a person who I think commands enormous respect for the courage he has shown—'contacted you?' He said: 'Senator, we got a great result. We got an enforceable undertaking.' I said: 'I didn't ask you what result you got. I'll ask you again: why did it take you 16 months to act?' The reason I asked the question was Jeff Morris told me that the 'ferrets', as they were called then, were feeding information to ASIC about the wrongdoings of the financial advice industry and Commonwealth Financial Planning, but ASIC were doing nothing. Finally, Jeff Morris went around to ASIC and banged on the door and said: 'Are you going to do anything? What are you doing? They're sanitising files et cetera.' Mr Kell said, 'We got a good result.' Well, Senator Cameron came in behind me and then said to me outside, 'We should have an inquiry into ASIC', which we did. We launched an inquiry into ASIC. That inquiry showed all the financial planning rorts and the wrongdoings, hence the inquiries and the compensation to follow.

I have got a list here somewhere of some of those financial planning matters. I will take you through them. ASIC have lifted their game, and they certainly had room to do that. I have been looking at ASIC's website; have a listen to this. On 22 March—that is not long ago—'ASIC permanently bans Queensland former financial planner for dishonesty'. These are financial planners; these are the people you are supposed to trust to give you advice on where to put your money and what to do with it. On 20 March, 'Former director fined for failing to notify market of share trading'. On 17 March, 'ASIC acts against Melbourne-based financial advice provider for alleged contraventions of FoFA obligations'. There was another one on 15 March, 'ASIC accepts enforceable undertakings from Westpac and ANZ to address inadequacies within their wholesale FX businesses'. On 10 March, 'ASIC permanently bans former Morgan Stanley Wealth Management financial adviser from providing financial services'. He was banned permanently; done for life. On 10 March, 'Former company director in court on charges of misappropriating investors funds'. And on 10 February, 'ASIC bans financial adviser for five years'.

Mr Acting Deputy President, if you ever leave this place, I have got a job for you. You would make a great detective. You could go through and clean this area up, if you are ever looking from another job. I know that you do not find that humorous. I am just being a bit humorous with you, sorry.

I will tell you another story, this time about Dr Roger Munro. Senator Dastyari will be keen to hear this. I rang this Dr Munro—I do not know what he is a doctor of—about 2½ years ago and I said: 'My name's John Williams. I'm a senator for New South Wales. Can I have a chat to you?' He said: 'Yes. What would you like talk about? Politics?' I said, 'No, I just want to ask you one question.' He said, 'What's that?' I said, 'What did you do with the $60 million?' He said: 'I'm not talking to you. Cheerio.' He hung up. I thought, 'Hung up, hey?' I then made a few phone calls. ASIC banned him for life from financial services and the ASIC media release on 17 March stated:

Dr Roger Gareth Munro was arrested by Queensland Police officers today and brought before the Southport Magistrates Court, where he was formally charged with five counts of fraud under s408C of the Queensland Criminal Code, following an ASIC investigation. Each charge carries a maximum period of imprisonment of 12yrs.

The DPP are running the case. I will not say any more, I will leave it to the court, but I know some of the people who are wanting their money back.

Senator Ketter mentioned earlier the inquiry we had in the economics committee, which was chaired by a very capable bloke. It was chaired by Mark Bishop. We went through the financial planning industry et cetera and the inquiry recommended a royal commission. But what did Labor do then? What did you do when Senator Mark Bishop, who was chairing the economics committee, recommended that royal commission? I will tell you what you did: you did nothing. You did not do a thing. I stood my ground; I was consistent and I supported the recommendation that a royal commission be held into this very issue. Kate Carnell, the Small Business and Family Enterprise Ombudsman, did a report recently. Ms Carnell said she was concerned by another inquiry she conducted, the impairment of loans inquiry, where she found that one-third of the banks' behaviour may well be 'unacceptable and possibly unconscionable' conduct. We need to find out more. I think Kate Carnell is doing a great job. There are a lot of problems there.

Now the parliament is doing an inquiry into the life insurance industry and I am quite amazed at what is coming forward. ASIC put a report out today on CommInsure—they have been doing an investigation—and there is more news to come out of that. But I am very concerned about the life insurance industry. The good thing about these inquiries is that you learn a lot as you go through. There are basically three types of life insurance. There is the group insurance you get with your superannuation. Nearly all Australians have it, and I think there are millions and millions of Australians who do not even know they have life insurance with their superannuation, but every month the premiums are taken out. Many of them do not know what the policy is for. They do not read it; they get the bit of paper; they do not care. We have a real problem there, and no doubt the committee will make recommendations on that. Then there is retail insurance, where you go and see your financial planner. The planner goes through the questions—what you want, what your family needs and the size of the mortgage on your house. What would happen if the money earner fell off his or her perch tomorrow? How would the family be left? Then you take out a policy and it is underwritten because you have answered 20, 30, 40 or 50 questions. You are underwritten; you are insured.

But then you have direct insurance, where you might see an advert on TV, you ring up the number and you think you are insured. I will give you an example, Senator Ketter. There might be a married couple of 35 years old. A bloke and his wife have one child and she is pregnant again. They have a mortgage on the house and he might say, 'Look, if I get run over by a bus tomorrow, how am I going to keep my wife and my two kids in the house? Will the bank sell the house? I need insurance.' So he may ring up and take out some life insurance, let's say a $300,000 death policy. In many cases, he is not underwritten; he just has a policy. He goes to bed at night and puts his head on the pillow thinking, 'I'm covered; I've got the family covered.' He might have a heart attack and drop dead. Then the insurance company might go back through his medical history and say, 'Oh, the young fellow at two weeks old had a valve replaced in his heart—he was born with a problem. Therefore, we won't pay. That was part of his history.' They do not pay under some circumstances like that. They will refund the premiums paid, but in the meantime the wife and the kids are kicked out of the house because there is no money earner. It is unacceptable when people think they have life insurance and actually do not.

We have seen the scandals about the medical criteria. A bloke, James Kessel at Wee Waa, had a heart attack. In the Guyra hospital his heart stopped beating. Mr Acting Deputy President, that would be pretty serious, wouldn't it, when your heart actually stops beating. They got him back to life. He told me he heard the nurse say, 'I think we've lost him.' Then it was ruled by the insurance company that he did not have a heart attack, because the criteria are outdated. This is crazy and it is why people become cynical about the industry. I am very pleased to see that Minister Kelly O'Dwyer has been involved in this. She is now bringing forward the standards for financial planners to see that they are educated, they have proper exams, they are doing the right thing and the standards are maintained all the way through. I commend Minister Kelly O'Dwyer for her work and wish her well with the upcoming birth of her baby. We have done a lot of work in the area of liquidators. Those new rules came in on 1 March and there are more to come on 1 September.

A solicitor in Adelaide told me once, 'Years ago, people robbed with a knife or a pistol. Now they rob with one of these'—a pen. It is sad and it is too common. I stand by what I said. I support a royal commission and would like it to include the industry super funds. We need to have a good, clean financial sector—and I am sure we have made a lot of progress. I am sure the banks have got the message. I have done a lot of work with Steve Munchenberg from the Australian Bankers' Association. He is a very decent man, in my opinion. Banks are picking up their game and picking up the standards of their financial planners. I still have a serious problem with vertical integration. When the companies have the financial products and they have their own advisers, I think there is biased advice there—it cannot be helped. That is a serious problem I have with it. But, in time, let's hope we get it right. I am not going to make a hypocrite of myself. I wish you lot over there had backed me when I said, many, many years ago, 'We need a royal commission into white-collar crime and the finance sector.'

Senator Dastyari interjecting—

No, you all went underground. You were not with me at all. So suddenly you have come out and—