Wendy Askew (Tasmania, Liberal Party) Share this | Hansard source

I take this opportunity to make a brief contribution on the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Bill 2019. This bill is further proof that the Morrison coalition government is continuing to fulfil our commitment to taking on all 76 recommendation of the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. During his speech to the Victorian Chamber of Commerce and Industry in Melbourne on 19 August 2019, the Treasurer announced the implementation roadmap, which set out how the government would deliver on its comprehensive response to the commission's recommendations. At that point the Treasurer indicated that we had already started to implement some of our commitments, and I will quote from that speech, noting that the date is 19 August:

Implementation is already substantially under way

The Government has made significant progress in implementing its response. We have already implemented 15 of our commitments, 8 of which relate to Commissioner Hayne's recommendations and 7 to our additional commitments. We have 24 streams of work under way.

Further, he went on to say:

Commitments already implemented include:

• Banning superannuation funds from treating employers, which will ensure that trustees do not use inappropriate means to influence employers to select a fund for their employees.

• Ensuring that trustees and directors of superannuation funds are subject to civil penalties for breaches of their best interests obligations.

• Funding the payment of around $30 million in legacy unpaid determinations from the Financial Ombudsman Service and the Credit and Investments Ombudsman.

During his response, Commissioner Hayne encouraged changes to be made carefully and simply, and the bill before us today seeks to respond to a further four of these recommendations.

This commitment to taking action on the recommendations laid out by Commissioner Hayne represents the largest and most comprehensive corporate and financial services law reform package in 30 years. It's important to emphasise that implementing the recommendations of the royal commission is critical to restoring trust and confidence in Australia's financial system, and it's part of the Morrison government's plan for an ongoing stronger economy. As the minister's incorporated second reading speech to this chamber states:

National unfair contract terms laws currently protect consumers and small businesses who purchase financial products and services through standard form contracts. Until now, insurance contracts have been exempt from regulation by these laws.

Schedule 1 will increase protection for consumers and small businesses purchasing general and life insurance products. It will give effect to the Royal Commission recommendation 4.7 and bring insurance's regulation into line with that for the rest of the financial services sector.

Ensuring consumers and small businesses can purchase or renew their insurance policies with confidence is important. Insurance cover for homes, motor vehicles, building contents and income protection helps limit loss and support households and, in turn, the broader economy.

Deterring insurers from drafting unfair terms in standard contracts and providing a remedy in cases where they are found will support fair treatment of consumers and small businesses.

Furthermore, schedule 2 of this bill will ensure adequate consumer protection provisions apply to funeral expenses policies. During the conduct of the royal commission, evidence was uncovered surrounding the significant harm caused to vulnerable consumers by the poor sales practices adopted by funeral expenses policy providers. The exemption in the Corporations Act that has allowed these providers to escape the scrutiny of the Australian Securities and Investments Commission will be removed. They will be subject to the Australian financial services licensing regime. This bill will ensure that the consumer protection provisions in the ASIC Act apply to funeral expenses policies, clarifying any ambiguity that may exist on this matter. The removal of this exemption will ensure that consumers have appropriate protections when taking out policies to help fund the costs associated with a funeral.

Schedule 3 of the bill will introduce a duty for mortgage brokers to act in the best interests of consumers, with a view to better aligning the interests of consumers and mortgage brokers, and will reform mortgage broker remuneration, with a view to mitigating the incentive for brokers to suggest loans that are not in consumers' best interests, as well as reducing impediments to consumer loan switching. The royal commission identified evidence of mortgage brokers recommending loans based on the commissions they would receive. Both the best interests duty and the reforms to mortgage broker remuneration will mitigate the incentive for mortgage brokers to suggest loans that are not in the best interests of the customer. The new rules will also limit the period over which commissions can be clawed back from aggregators and brokers to two years and will prohibit the cost of clawback from being passed on to consumers.

Reflecting on the progress to date in relation to the recommendations, I also reflected on my earlier career and the brokers and insurance agents that I had dealt with on a regular basis. During my first speech in this place in April last year, I acknowledged that most of my career had been in banking. At that time, I went on to say:

… I am the first to say that poor practices should be exposed and those undertaking them should be held to account. But it is important not to overlook the diligent work being undertaken by tens of thousands of loyal and committed staff who get great job satisfaction in assisting Australians with their everyday banking needs. The only thing that separates a bank officer from a bank customer is a counter. We all share the same pressures of home budgets, making ends meet, working out how to buy a house, planning for retirement and dealing with unexpected expenses which can arise. My experience with former banking colleagues and with senior managers is that almost everyone I met approached their job and their responsibilities with integrity and care for the circumstances of the individual customer.

The implementation of the recommendations will only serve to benefit and further protect those working in the financial sector. However, those sentiments still remain. We must remember that staff on the front line, whether in retail banking, broking or insurance, deserve our respect and to be treated that way in our daily interactions. The irresponsible actions of just a few can harm so many.

Having said that, those of us in this chamber must remain focused on providing an environment where all Australians are not being taken advantage of by unfair contracts, not being exploited in vulnerable times of their lives or not having their best interests supported by lenders. This bill seeks to address these issues, and I commend this bill to the Senate.