Tony Sheldon (NSW, Australian Labor Party) Share this | Hansard source

I rise to speak on the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021. The bill implements recommendation 2.10 of the Hayne royal commission, which recommended that a single disciplinary body be established for financial advisers. Labor supports this bill.

This bill has been reviewed by the Senate Economics Legislation Committee, and I support the comments made by Senators Chisholm and Walsh in the committee's report which call on the government to strongly consider the views of consumer advocates and 'consider appointing representatives with appropriate consumer experience and sectoral knowledge to the Financial Services and Credit Panel'. But of course Labor still does support this bill. Indeed, Labor have been very clear that we seek to rapidly progress any legislation that appropriately implements the findings of the Hayne royal commission.

Unfortunately, this enthusiasm has not been shared by the Morrison government. The Prime Minister infamously voted against a royal commission into the banks 26 times—26 times! Now, we know the Prime Minister hates nothing more than being held accountable for his decisions, and he was determined to extend the same courtesy to the big banks. The royal commission found these same banks to have engaged in shocking behaviour. They were ripping off and rorting thousands of Australians. Some of the rorting would almost make the Morrison government blush—almost. This is how widespread the rot is in the financial services sector, and the Prime Minister voted against a royal commission into that industry 26 times, on 26 separate occasions.

It's very fortunate for the thousands of the victims of this financial exploitation around Australia that Labor and the crossbench were so determined to bring the royal commission about. While we were pushing for a royal commission, Mr Morrison was going on television and saying, 'It's nothing more than a populist whinge.' In another interview he called it 'a reckless distraction'. That is very strong language from the Prime Minister. I have never heard him use that sort of language to support hardworking Australians when they're under attack, such as the 2,000 workers whose jobs were outsourced by Qantas last year—this was while Qantas was receiving $2 billion in taxpayers' money from the Prime Minister to keep them employed. The Prime Minister hasn't lifted a finger to support them, even after they won their landmark case against Qantas in the Federal Court earlier this year. And even though many of those Qantas workers live in his own electorate of Cook, it really goes to show what side the Prime Minister is on. If you're an outsourced Qantas worker, you get nothing from Mr Morrison. You don't even get access to the latest aviation support the government has announced. That only goes to direct airline employees. But if you're the CEO of the Commonwealth Bank, you're in luck. Mr Morrison will go in to bat for you.

Let's remind Mr Morrison about what the royal commission actually discovered was happening in the financial services sector. Here is what the 'populist whinge', as Mr Morrison referred to it, actually revealed. The corporate regulator, ASIC, revealed 90 per cent of financial advisers who provided advice to self-managed superannuation funds had failed to comply with the best interests of their clients—90 per cent.

Some of largest companies in Australia—the Commonwealth Bank, NAB, AMP and Westpac—had continued to charge clients for advice and life insurance after they had died. AMP alone admitted to continuing to charge life insurance premiums to more than 4,600 of their dead customers. There were widespread reports of fees for no service not just to the dead but also to the living. The big banks were forced to pay over $1.2 billion in compensation for fees for no service.

The commission heard that the NAB's Introducer Payments Program had paid exorbitant sums of money to accountants, tailors and gym owners to push their clients into unsuitable home loans. One introducer, who worked as a tailor, had successfully pushed his clients into $122 million worth of home loans, and reaped $488,000 in fees.

The Commonwealth Bank admitted to offering repeated credit card limit increases to a customer who was begging them to stop because he had a gambling addiction and was already $30,000 in debt. The Commonwealth Bank also admitted to selling credit card insurance to 60,000 ineligible unemployed customers.

Insurance giant Allianz admitted it sold junk insurance to 68,000 Australians. That is insurance that provided little or no actual benefit. Now, Allianz wasn't alone. IAG also sold junk insurance to 68,000 people. Suncorp sold junk insurance to more than 41,000 people. And QBE sold junk insurance to more than 35,000 people. One of the biggest life insurance companies in Australia, TAL, abruptly stopped paying insurance to a woman with cervical cancer because TAL discovered she had sought help for completely unrelated mental health issues years before her cancer diagnosis. ASX-listed Freedom Insurance was exposed for cold-calling a 26-year-old man with Down syndrome and selling him more than $100,000 in life insurance. When the man's father complained, Freedom's staff ridiculed him and called him a whinger. That same company was also exposed as having tried to hang on to customers when they tried to cancel insurance policies.

The commission heard about how banks have ripped off small businesses, particularly in regional Australia. ANZ threatened one farming couple with bankruptcy if they didn't sell their sheep, farm and home to come up with $300,000 within just eight days. The commission heard about the disgraceful exploitation of Indigenous Australians by funeral insurance companies. Some families were paying for four or five different funeral insurance policies at a time without their consent or knowledge. These are just a few of the disgraceful stories that came to light through the banking royal commission, the commission Mr Morrison voted against 26 times.

The Morrison government could have redeemed itself by quickly implementing the commissioner's 76 recommendations, but, 2½ years after that final report was handed down, just 27 of the 76 recommendations have been implemented. That is just 36 per cent. That is a failing grade in any marking system. If the Morrison government were implementing the royal commission recommendations any slower, you could mistake it for their vaccine rollout.

If you open up Commissioner Hayne's report and start counting through the recommendations, it doesn't take long to find where the Morrison government lost interest: recommendation 1.1, literally the first recommendation, the most basic and fundamental recommendation to come out of the royal commission. Recommendation 1.1 said that the government should not water down responsible lending obligations on the banks, and what has the government done? It has introduced a bill to do exactly that, the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020, which has already passed through the House. It has been lingering on the Senate Notice Paper for months like a bad smell.

When the government issued its official response to the royal commission, the Treasurer said:

… we committed to taking action on all 76 Royal Commission recommendations and, in a number of important areas, going further.

The Treasurer's press release went on to say:

That deadline was 10 months ago, and we've barely scratched the surface. The truth is that the government never had any intention of implementing most of these recommendations. We know Mr Morrison did not want this royal commission, because he voted against it 26 times, and we know now that Mr Morrison did not want to implement its recommendations.

But why does Morrison not want to hold the banks to account? Firstly, because, if Mr Morrison began holding the banks accountable for their actions, where would it end? The Prime Minister would risk creating an expectation that the rich and powerful in Australia can be held to account, and that would end up coming right back to Mr Morrison's own door.

There's another reason why the Morrison government won't hold the banks to account: it's because the Morrison government is so close to the big bank lobbyists that one of those lobbyists was even elected to the Senate: the senator for the Financial Services Council, Senator Bragg. Senator Bragg worked at the lobbying group for the financial services industry, the Financial Services Council, for eight years, from 2009 to 2017. While Mr Morrison was voting against the royal commission and calling it a populist whinge in August 2016, Senator Bragg was working as director of policy for the Financial Services Council, and now they are in government together. The foxes are well and truly in the henhouse.

The only part of the financial services sector that we know the Morrison government is interested in fighting is industry super funds, which happen to be one part of the financial services sector that came out of the royal commission with reputation largely intact. Industry super funds return all profits to their members. They perform better on average. They have lower fees. They have not engaged in the sort of disgraceful conduct uncovered by the royal commission. And yet time and time again the government introduces bills to try and lure more unsuspecting Australians into the retail super shark tank. The government uses none other than the Financial Services Council lobbyist himself, Senator Bragg. When trust in democracy and trust in parliament is at an all-time low in Australia, this really sums it all up. Who is the chief attack dog on industry super? Senator Bragg. We have a government that never wanted a royal commission into misconduct by the most powerful companies in Australia, the big banks. When they were finally forced into setting it up, they pretended to accept all the recommendations and only actually implemented 36 per cent of them. Then, to cover this all up, they brought the lobbyist for those financial institutions, Senator Bragg, into the Senate. Then the government used Senator Bragg to attack the one part of the financial services sector that was shown to be doing the right thing: industry super funds.

In August the government quietly dropped new regulations to mislead more Australians into higher-fee retail funds. According to these new regulations, super funds will only be assessed on the administration fee they charged in the most recent financial year. The performance test was originally based on the average fee charged over the past eight years. This is an absolute joke. The new performance testing laws were passed through the Senate only a few months ago, and in the space of a month the government passed a regulation to completely change how the performance testing is conducted. Because the testing ignores the fees that high-fee retail funds have charged over the last eight years, retail funds will be able to misrepresent the returns they have delivered. The government knows this is a complete misrepresentation. That's why they didn't include it in the legislation that was passed in parliament. They waited a few weeks and snuck it into regulations instead.

This government is not on the side of any Australian seeking the best returns for their super money. This government is not on the side of any Australian who wants a fair and equitable relationship with their bank. This is a government which hires bank lobbyists as senators and voted 26 times against a royal commission. Setting aside for a moment the 49 royal commission recommendations which are being left to wither and die on the vine, Labor supports this bill. This bill unfortunately implements just one recommendation of the royal commission. It's a shame it has taken so long and this is just one of the many overdue recommendations.

I also note and support Senator Gallagher's amendment that the Senate note the government's failure to act on the recommendations more broadly and Senator Patrick's amendment to require the government to show the Senate its draft regulations before this bill is passed. We have already seen, with the Your Future, Your Super laws, that this government will sneak in despicable regulations whenever it can. I urge the Morrison government to stand up and hold the hose this time and clean up the banking and financial services sector, not continue to lie doggo on it.