BILLS; Treasury Laws Amendment (ASIC Governance) Bill 2018; Second Reading

May 09, 2018

Mr HAYES (FowlerChief Opposition Whip) (12:24): I too would like to make a contribution on the Treasury Laws Amendment (ASIC Governance) Bill 2018. We on this side will always support the interests of everyday Australians. We have fought against corporate misconduct and the watering down of consumer protections. That is why Labor will support this bill. We will support all appropriate measures to assist ASIC to become more effective and efficient in its regulation of the financial sector.

This bill amends the ASIC Act to give the Governor-General the discretion to appoint a second ASIC deputy chairperson. Amending the ASIC Act will provide for two deputy chairs and that, in turn, will provide greater flexibility for the commission to determine how it undertakes its oversight and other governance functions. A second deputy chairperson will be able to assist ASIC in engaging with stakeholders to better communicate its role and priorities and how its resources are going to be allocated. Essentially, that's why Labor will support this bill.

In the wake of the royal commission into the misconduct of the banking, superannuation and financial services industry, there are certainly some big lessons to be learnt from that, including the need for strengthening the regulatory aspects of the financial sector to protect Australians. This calls for greater flexibility and increased capability to crackdown on misconduct and for adequate resourcing of the financial sector regulators. If we haven't learnt anything from the royal commission, I think we should at least acknowledge that there is that need to provide greater support for the regulator in that respect. Therefore, giving ASIC greater powers to protect consumers and rein in corporate wrongdoing means that the government can no longer be the unwitting, or sometimes witting—I'm not sure—accomplice to financial misconduct. I'll come to this a little later on but, with the benefit of hindsight and the damning revelations of the bad behaviour from banks and various financial advisers, the government has finally proposed tougher accountability regimes and making ASIC the one-stop shop when it comes to consumer complaints.

I did say that the government may be seen as an unwitting accomplice to financial misconduct. To put this in perspective, don't forget that it was the coalition government that defended the banks for far too long. The coalition have prioritised the banking sector and financial institutions over consumers—over the people. After the shocking evidence that has come out in the royal commission, it is clear that we do need better outcomes for consumers. For far too long the government has attempted to protect their friends in the big end of town and the banking sector by resisting any investigation into corporate misconduct. But don't forget that, in 2016, the Prime Minister, in resisting Labor's call for a royal commission into banking, said:

Bill Shorten's call for a royal commission into the banking industry is just another distraction, just a thought bubble … to respond to the news of the week.

I'm not sure how he would swallow that comment today.

An honourable member: That transcript's not on his web page!

Mr HAYES: It'll be on my website! As to the financial services minister, Kelly O'Dwyer's, view of the royal commission into banking, she was very succinct about it. She said, 'It will just be a talkfest.' We had ministers saying, 'It's only designed to make lawyers rich,' and the Treasurer, Scott Morrison, saying that Labor's push for a royal commission into banking was a 'populist whinge' that would not uncover anything of which the government was not already aware. So would you call the government an unwitting accomplice to poor behaviour in the banking sector, or were they really an accomplice to the bad behaviour in the banking sector? Again, I quote from the Treasurer, who said:

I think there is the great risk that if the opposition continues to engage in this recklessness that the only product of that approach could be to undermine confidence in the banking and finance system.

Let's briefly look at the evidence that's been elucidated so far in the royal commission. I know the royal commission has some time to run, and possibly will be seeking an extension of time, because it seems the commission has taken seriously the complaints lodged before it. In relation to Commonwealth Bank, the evidence so far has been that it continued to charge a customer for services that were never provided, even though the customer had been dead for 10 years and the financial adviser knew it. It charged ongoing service fees to customers despite the fact the adviser never provided any advice to any customer at all and admitted to charging customers for advice that was never provided. It's not a ringing endorsement of 'Which bank?' Don't forget: this is the system that was being protected by the Prime Minister, the Treasurer and the Minister for Financial Services.

AMP you can see in the newspapers. I'm not sure if they have anyone left on their board now. They had a few departures. An AMP financial service adviser gave advice to a couple to switch to an AMP fund, even though it would immediately cost the husband $16,000 of his retirement savings and mean higher ongoing fees and charges for his wife. The counsel assisting the royal commission said that AMP misled the corporate regulator, ASIC, at least 20 times about fees being charged for services that weren't provided. An AMP executive admitted to the royal commission that he'd lost count of the number of times the company had misled the corporate regulator about fees charged for nonservice. Finally, the barrister assisting the royal commission said that AMP should be charged with criminal offences for misleading the corporate regulator in relation to fees for nonservice.

As for ANZ, their financial adviser that was before the royal commission is now being dealt with by the police for taking over $200,000 of customer money without authority. The same ANZ financial adviser told five of his clients that they should invest their retirement savings in an investment property of which he was the sole director. On each occasion those clients lost in excess of $100,000. You might say that's just a one-off bad apple, but the ANZ as a bank turned a blind eye to these concerns about the same financial adviser. By the bank's own admission to the royal commission, the commercial interest of the bank took precedence.

In respect of Westpac, a nurse told the royal commission that she'll now have to work until she's 80, because a Westpac financial adviser told her and her husband, a truck driver, to sell their house and switch to a self-managed super fund which was totally unsuited to their needs. It soaked up tens of thousands of dollars in commissions and unnecessary premiums in respect of insurances taken out, but they lost out all round because of the inappropriate product peddled to them. With respect to National Australia Bank, apparently it was commonplace for their employees to falsely sign a document as a witness—so much so that a NAB executive complained about having their bonuses cut when it was revealed hundreds of NAB employees were involved in falsely signing documents. They actually knew about these things, and none of these self-compliance aspects were reported to APRA.

Don't forget: this all started when Commonwealth Bank was caught breaking money-laundering and terrorism-financing laws on 54,000 occasions. It has now resulted in a damning report by APRA. But, at a time when this government talks a lot about national security and border protection, we have seen one of our big four banks, one of the pillars of our financial system, on 54,000 occasions breaching money-laundering and terrorism-financing laws. There is no wonder that the public have lost confidence in our banking and financial institutions. They have lost confidence in a government that chose to defend the banks over the interests of the Australian people. This government were taken kicking and screaming to a royal commission. We can't colour that any other way. They opposed this outright, until the will of the Australian people was just so profound that they came, as I say, kicking and screaming to this position—where they predominantly wanted to protect their mates at the big end of town.

Now the Prime Minister has admitted that the Australian people were not put first. The government, quite frankly, have a great track record of not putting Australians first when it comes to these major decisions. One of the first actions taken by the coalition government when they came to power was to gut Labor's Future of Financial Advice reforms—powers which we had given to ASIC to crack down on poor financial advice, to ensure that financial advisers put the interests of consumers first and foremost in the provision of advice. The government dragged their feet in the calling of the royal commission, for fear of exposing wrongdoing within the banking sector, and it's taken a significant number of scandals to emerge for the government to realign their priorities and at least admit that they got things wrong in failing to endorse Labor's call for a royal commission.

Juxtapose that with the readiness of this government to have a royal commission into the working class of our land, a royal commission into the trade unions. The government, at every question time, at every opportunity, would recount the evidence taken by a royal commission which they spent $47 million on. And do you know how many prosecutions that wound up with? One. Against the wishes of even the royal commissioner, we had the then Attorney-General, before he darted off to Britain, extending the life of the royal commission, saying, 'You need more evidence.' The royal commissioner didn't ask for that, but the government wanted to give them more evidence, because this was a political stunt that they wanted to pull against Labor and those in the labour movement. They could not wait to have this thing extended. They wanted more and more evidence, and we got daily reports in the parliament about the issue of so-called corruption within the trade union movement. We have heard hardly a peep from the government so far about the misdeeds in the financial sector, particularly by the banks.

So the government has backflipped. It has backflipped and seen the flaws in its primary position of protecting the financial sector from further scrutiny. We do support this bill, because we think the provision of an additional deputy chair will assist ASIC in its operating efficiency and assist it to be more effective as a regulator in the financial sector.

The DEPUTY SPEAKER ( Ms Vamvakinou ): The original question was that this bill be now read a second time. To this the honourable member for Kingsford Smith has moved as an amendment that all words after 'That' be omitted, with a view to substituting other words. The immediate question is that the amendment be agreed to.

Question negatived.

Original question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.