Peter Khalil: We are considering the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018. Looking at where it falls short, which we have heard much of from a number of speakers who have gone before me, we would think that this government, after all we’ve seen in the royal commission and all that’s been revealed, still and deliberately doesn’t have the interests of the Australian people in mind. Rather, it seems that deliberately it just has the interests of their corporate big bank buddies in mind.
We’ve seen the Abbott-Turnbull-Morrison governments dragged kicking and screaming to agree to a banking royal commission after years of public pressure from whistleblowers, consumer groups, Labor and others, including some of the crossbench and even some National MPs. Mr Turnbull made the decision for the commission in the face of open revolt by some National MPs, including the member for Dawson, the member for Wide Bay and Senator Barry O’Sullivan. That’s what it took for the government to actually relent—some of its own to break ranks. And still Mr Turnbull characterised the decision as ‘regrettable but necessary’. What an insult to the Australian people! What an insult to the people who have suffered the indignity of the big banks taking their rights away.
Labor agrees that the royal commission was absolutely necessary. But regrettable? Hardly. It is actually regrettable that the banks discovered it was highly profitable to sell their customers financial advice that consisted of purchasing their financial products so that they would enjoy a profitable feedback loop—a business model called vertical integration. It looked at the quality of financial advice being offered by the two largest financial advice licensees owned or controlled by the Commonwealth Bank, ANZ, Westpac, National Australia Bank and the AMP.
It’s regrettable that an ASIC report scrutinising the practice of vertically integrated institutions and conflicts of interest found that the financial advisers from those banks—Commonwealth Bank, ANZ Banking Group, Westpac National Australia Bank and AMP—had failed to comply with the best interests of customers in 75 per cent of advice files reviewed. The report concluded that there was an inherent conflict of interest arising from banks providing personal financial advice to retail clients while also selling them financial products.
It’s regrettable that these banking and financial service providers were found to be charging dead customers for these services, in one case in the Commonwealth Bank for more than a decade. It’s regrettable that, as Treasurer, the Prime Minister, the member for Cook, labelled Labor’s push for a banking royal commission as nothing more than ‘a populist whinge’. It is regrettable, indeed. In fact, it is more than just regrettable; it’s shameful. Those on the opposite side have many things to be ashamed about, and their lack of will or wilful ignorance is right up there as one of the biggest reasons they should be ashamed. It is shameful that Australia had to witness the Abbott-Turnbull-Morrison government resisting consistent calls for a banking royal commission after a string of damaging reports and scandals right across the financial services industry. If anybody opposite over there on the government benches has any shred of integrity or sense of right and wrong they should know they owe Australia an apology for dragging their feet for so long. It’s as simple as that.
While Labor are generally supportive of this bill, as we have heard, we want to see stronger penalties for corporate misconduct because the recommendations that this bill was based on are now out of date. We know that the bill would increase penalties for corporate and financial sector misconduct, diversify regulatory options for ASIC and introduce a new disgorgement remedy and a priority in the legislation for consumer remediation over penalties. That is all good. But it still falls short. The bill implements recommendations of the report of the ASIC enforcement review task force, released in December 2017. So why does it fall short? Since this report was released, the banking royal commission has uncovered widespread and systematic misconduct across the financial services industry. The interim report of the royal commission found that, when misconduct was revealed, either it went unpunished or the consequences did not meet the seriousness of what had been done. So, after what we have seen in the royal commission, Labor believe the parliament must make it crystal clear to banks and financial institutions that corporate misconduct will no longer be tolerated. That is why the shadow minister, the member for Hotham, has moved these amendments. Increase the jail terms and remove the $210 million penalty cap for big business.