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Wednesday, 6 December 2017
Page: 9806


Senator ANNING (Queensland) (10:16): This is not my first speech. I rise to speak to the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017. The bill amends the Corporations Act to establish a new dispute resolution body, the Australian Financial Complaints Authority, to ensure that consumers and small businesses have access to free, fast and binding dispute resolution. The bill comes on the back of the Ramsay review of 2016, which recommends that significant reform is needed in the disputes resolution process. It also implements the recommendation of the Carnell report to establish a small business disputes resolution one-stop-shop to hear credit disputes for amounts up to $5 million. The AFCA will replace the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal, but it will have additional statutory powers.

The Australian Securities and Investments Commission, ASIC, will be responsible for ensuring that AFCA meets the standards set out in the legislation. The bill will provide ASIC with the ability to set regulatory requirements that AFCA must meet, and the power to compel AFCA to comply with the standards set out in the legislation. Under the AFCA, consumers and small businesses will be able to have their disputes with financial firms heard and determined by AFCA, at no cost. Under the current system, it is difficult to achieve comparable outcomes for customers with similar complaints, because different bodies handle the complaints.

In his second reading speech, the minister stated that the bill forms part of the government's broader commitment to ensuring that banks and other financial institutions are held to account when they fail to meet community expectations. Insofar as this bill does this, I applaud the government's efforts and support this legislation. My only concern is that the role of AFCA may be too limited, particularly in the size of debts that may be considered. Many farmers with debts exceeding $5 million find themselves in trouble with ruthless banks, and I am concerned that they will not be able to access the benefits of this new complaints authority, or that its rulings may be not be sufficiently strong to overcome the vested power of usury. I, and many colleagues from the bush, have heard hundreds of heart-rending stories of how family farms have been stolen by deceptive and amoral lenders. Rural borrowers have faced unconscionable treatment by banks, which have tricked them into overdrafts, based on phoney, inflated valuations, only to have those same farms seized when lenders subsequently revalued the property in order to create an unsustainable debt-to-equity ratio. We have heard of numerous cases where banks sought to foreclose on properties on which repayments were fully paid up to date, claiming so-called 'anticipatory breaches', using fictitious future projections of reduced income.

If these same lending practices were extended to big-city home borrowers, hundreds of thousands of families who are fully up to date on mortgages would lose their homes and there would be rioting in the streets. It is only the fact that the farmers who are victims of usury are in remote locations and small in number that their hardship and misery are hidden from the wider population. This is along with the waves of suicides that follow the loss of properties that have been in families for generations.

Because of my concern to ensure that this bill does, effectively, help rural borrowers in these dire straits, I will be supporting the government's amendment that calls for a review of AFCA 18 months after it's established. This amendment will require the minister to commission an independent review of the effectiveness of the AFCA scheme regarding rural debts. The aim of this review will be to consider the limit on the value of claims established by the bill and to consider the effectiveness and fairness of remedies provided by the authority once it commences operation, particularly considering feedback from complainants. Since a proposal for an 18-month review of the effectiveness of this authority is entirely consistent with the stated intent of this bill, I strongly encourage all senators to support the government's amendment.