Rex Patrick (SA, Nick Xenophon Team) Share this | Hansard source

I'd like to take this opportunity to put on the record the Nick Xenophon Team's support for this bill. A new accountability framework for the banks and for senior bank employees is long overdue. The Nick Xenophon Team welcomes the delayed implementation for small and medium banks, credit unions and building societies. While the bill may not be perfect, it should not be opposed. The royal commission into misconduct in the banking superannuation and financial services industry is finally underway, and I sincerely hope this will lead to a change in the culture that has adversely affected the lives of so many consumers.

The royal commission will also examine the need for a last-resort compensation scheme for victims of bad financial advice and misconduct. A number of senators in this chamber would be aware of the strong advocacy by former Senator Nick Xenophon on the issue of a last-resort compensation scheme. A last-resort compensation scheme is the only way to ensure that customers who suffer loss from misconduct are compensated. It is a missing piece of a financial services regulatory framework. The Nick Xenophon Team looks forward to seeing the recommendations of the royal commission in relation to last-resort compensation schemes.

I will also take this opportunity to indicate the Nick Xenophon Team's position on the amendments circulated by Senator Whish-Wilson. We do not support the amendment on sheet 8342 relating to executive caps. Whilst we agree that the pay packets of many CEOs in the financial services industry are far from perfect and ought to be reformed, it is the shareholders who ultimately bear the cost of paying the CEO. The direct intervention approach as proposed by the Greens is not an approach that is supported by the Nick Xenophon Team, but we do believe that the issue of executive pay is a debate worth having.

I can indicate that we will be supporting the amendment on sheet 8343, as the penalty regime does not adequately reflect the difference in size between big banks and the smaller regional and customer owned banks. The entire profit of the customer owned banking sector in 2016-17 was $487 million. In contrast, the Commonwealth Bank announced today a $4.8 billion half-year profit. We believe that this amendment will prevent any disproportionate impact on smaller banks and assist in discouraging activity within banks that gives rise to prudential risk. In closing, I'd like to acknowledge the work of the Economics Committee and thank those who made submissions to the inquiry into this bill.