Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Attorney-General (Senator Brandis) to a question without notice asked by Senator Whish-Wilson today relating to the financial services sector.

I am glad that Senator Brandis is still in the chamber. If I were to break into Senator Brandis's car, or his house or even his bank account and repeatedly steal money from him, or from other people, it is very likely that I would be charged under a criminal offence—and Senator Brandis would know better than I would what that would be—and I would go to jail.

What I cannot stomach is that the committee I am part of, which itself recommended a royal commission—and I will get to why in a second—has seen evidence of systemic fraud, deception and misleading conduct within the financial planning industry that has ripped millions of dollars out of Australian savings. We have just released a report into forestry management investment schemes and the sum total of it was that $4 billion worth of investment money was lost, billions of dollars in tax was avoided and the schemes have totally failed to achieve what they set out to do, and that was to be self-sufficient in timber products. They were sold for a few cents in the dollar to foreign interests. And while a few people made a lot of money out of these schemes, such as financial planners, accountants, broking firms and the promoters of the schemes themselves, tens of thousands of Australians have lost their savings and some have lost their homes, and are still losing their homes.

The committee has found that while this is not strictly illegal or criminal it is certainly something else: that is, it is a serious cultural issue that needs to be dealt with. So maybe the situation is that our laws actually need to change so that people who knowingly rip off customers—mum-and-dad investors—and take away their life savings by putting them into dodgy products because it is to the advantage of the financial planner or the accountant to do so, go to jail. There should be fines in place that actually provide a disincentive for this kind of bad behaviour.

When the committee looked into the Commonwealth Bank there was not just one situation; there were dozens, if not hundreds, of people implicated in a scandal at that bank, including clear evidence of fraud. To their credit, the bank said that they would fix it. We then uncovered a number of other scandals at other banks that were similar or, in some cases, worse. Last week it was revealed by Four Corners that Commbank's Comminsure business was, in many cases, not paying out to people who were due for their life-insurance, and they were coming up with very dubious reasons for not doing so.

There is a fine line between me stealing $100,000 by hacking into someone's bank account and making a dodgy decision about not giving someone a payout that they are due for. While that might not be criminal behaviour, there is a systemic cultural issue within financial services companies: from the CEO down they are remunerated according to bonuses. In other words, it is based on how much money they make. The profit-at-all-cost mentality is why corners get cut and why salespeople are under pressure to meet targets. This is all the kind of stuff that the committee has heard.

Senator Bishop, a Labor senator who chaired the economics committee, recommended a royal commission just into the Commonwealth Bank because he felt that as much as the Senate did what it could we did not have the investigative powers and the resources to get to the bottom of this cultural issue.

Since then, we have seen a number of blow-ups across the sector. One has to wonder whether we are really just scratching the surface. We have to take the word of a CEO when they front the committee and say that it is all fine and that they have fixed it. But how long is it until the next scandal arises—nearly always because of whistleblowers?

The GFC wiped trillions of dollars from the world economy. It was an absolute catastrophe. Do you know what? Only one person has been sent to jail. If senators have not seen the movie, The Big Short, or read the book, I thoroughly recommend that every senator goes to see it. Do not come into this chamber and to tell me that those acts in the GFC, as for those in forestry managed investment schemes and other toxic financial products, were not the acts of criminals. If it is not illegal to profit at someone else's expense and do it continually, and if we do not have the regulations and the power to prosecute—if that is not illegal then it should be, and we need to change the law. (Time expired)

Question agreed to.