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Tuesday, 5 December 2017
Page: 9743


Senator CAMERON (New South Wales) (18:12): In October last year, under pressure to respond to Labor's call for a banking royal commission and to his own backbench, the Prime Minister promised to establish a new tribunal to deal with financial services complaints and disputes. So it's with some irony that the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 is the bill the government is putting forward to deliver on that promise, because this bill does not create a tribunal. Instead of creating a tribunal, this legislation actually abolishes a tribunal already in place. This bill was all about this government distracting attention from the urgent need for a royal commission into the banks. It comes out of a review that was announced by the Turnbull government precisely 12 days after Labor began calling for a royal commission.

It's astonishing that, for all the rhetoric we have heard about the government's 'take action now' approach to the banks, what we have here is not a significant change at all in improving consumers' rights against the banks. We have had a lot of rhetoric from the government implying that this dispute resolution scheme is something new or suggesting that the idea of going to an ombudsman to get your dispute with a bank resolved is some revolutionary idea. On 1 November 2017, the Treasurer said:

You can create a new financial complaints system which is binding on the banks and you don't need an army of lawyers to get your case heard. That's what Kelly O'Dwyer has done.

The reality is that we already have existing external dispute resolution schemes that already provide no-cost accessible dispute resolution for those who have a financial services dispute. These are the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. The AFCA is not some whiz-bang new idea; it was part of a confected, piecemeal and cynical response to the problems in the banks from a government hell-bent on protecting their mates in the banks from the independent, thorough and transparent investigation that only a royal commission can deliver.

This new scheme is called the Australian Financial Complaints Authority. We know from responses to questions on notice that the name was first suggested by the office of the Minister for Revenue and Financial Services. But what we also know is that it is not a tribunal, like the Prime Minister promised. It's not even a government authority at all. The word 'authority' in the AFCA's name is a misnomer. The explanatory memorandum to the bill confirms that the AFCA is just another ombudsman scheme in the form of a private company limited by guarantee. This is straight out of an episode of Utopia. The government wanted to keep protecting the banks from the scrutiny and investigation powers of a royal commission, but they wanted to somehow look tough on the banks. So we end up with another ombudsman scheme but with a grander sounding name.

ASIC has confirmed that the new Australian Financial Complaints Authority will have no new powers to resolve disputes that the existing bodies do not already have—that is, after everything that has gone into creating it, the Australian Financial Complaints Authority will have no new powers. In particular, it will not have any new powers in relation to disputes with banks that the FOS does not already have. There are no new powers to compel documents from banks or to join third parties in disputes with banks. The Australian Small Business and Family Enterprise Ombudsman was very concerned with this. Officers from the Australian Small Business and Family Enterprise Ombudsman were asked at the Senate inquiry into this bill:

And there has been some criticism that, potentially, AFCA has been designed for the benefit of big business as opposed to the benefit of small business. What would you say to that contention?

The response was:

AFCA's been designed for the needs of the banks.

That says it all about this government. They have a royal commission that is designed 'for the 'needs of the banks', and they have this proposition that was designed 'for the needs of the banks'. Unfortunately, when it comes to this government, the needs of the banks take precedent over the needs of the consumers, over the needs of the Australian public, who are getting ripped off day in and day out by these banks.

The one part of the AFCA that could deliver benefits is the prospect of increased monetary limits and the value of disputes that can be heard compared to the caps on disputes at the Financial Ombudsman Service and the Credit and Investments Ombudsman. However, we are concerned that the government has not committed to the detail on the increased thresholds in this bill. The government is still consulting on the limits on the value of disputes that can be heard, so they won't actually be put into the bill.

The government is replacing the Financial Ombudsman Service and the Credit and Investments Ombudsman with a private company limited by guarantee ombudsman service and the AFCA—a merger and rebranding. ASIC has confirmed that, aside from the potential increases in the value of disputes that can be heard, the new Australian Financial Complaints Authority will not have any new powers to resolve consumer disputes that the first two bodies do not already have. However, in abolishing the third body—the Superannuation Complaints Tribunal—the bill is much more than a rebranding exercise, and Labor believes this will weaken protections and outcomes for consumers. This rabble of a government hate the superannuation industry so much that they're prepared to diminish protections and outcomes for consumers.

Unlike the first two bodies, the Superannuation Complaints Tribunal was established as a government statutory tribunal with special powers and expertise to deal with superannuation disputes. It was established in 1993 with the introduction of the Labor government's universal compulsory superannuation arrangements. Whilst the Liberals have never supported universal super, Labor understands that superannuation is not simply another financial service and shouldn't be treated as such. The compulsory nature of savings and the long-term investment horizon mean that special care must be taken when considering policies for superannuation dispute resolution. Under this legislation, disputes over an individual's superannuation will now be lumped in with those from the banks, insurers, payday lenders—of all people—and others. Chairperson of the Superannuation Complaints Tribunal, Helen Davis, told the Senate hearings into this bill:

I don't think it would be true to say, in relation to super, that it's a rebranding exercise. Arguably, it's quite a significant change for superannuation, specifically in terms of the external dispute resolution. It goes from a statutory body to a non-statutory body. It moved from a specialist body to a one-stop-shop body.

Labor's overriding concern with the proposed abolition of the SCT is that no evidence has been produced to demonstrate that the abolition of the SCT and its replacement by an ombudsman scheme will result in more efficient and better outcomes for superannuation fund members and their beneficiaries. The parliament should be clear what is happening here. By abolishing the Superannuation Complaints Tribunal the government is handing superannuation complaints to AFCA and it is replacing a statutory tribunal body with a private company limited by guarantee. It's replacing a public body that is accountable to the government and the parliament with a private body that is accountable to the financial firms that are its members, albeit with some ASIC oversight. It's replacing a specialised professional body, adept at handling complicated and sometimes heated superannuation disputes where substantial sums of money are involved, with a generic, broad, one-stop-shop body. It's replacing a body whose chairperson and members are appointed by the government with a body where the government will only have the right to appoint a minority of the inaugural board and nothing further. On top of all that, it's abolishing an important part of the architecture of Australia's superannuation system. The reality is that, if this government had its way, it would abolish superannuation completely and it would attack the superannuation rights of workers in this country.

The SCT was established as part of the suite of reforms in 1993 to establish the universal compulsory superannuation system. Labor is proud of its record when it comes to superannuation, enabling people to retire with a higher standard of living and taking pressure off the federal budget. The design of the SCT recognises that superannuation is not just a regular financial service based on a contractual relationship. The design of the SCT recognises that superannuation trustees are custodians of the retirement savings of millions of Australians. They have obligations to all their members. Indeed, it's telling that through the process that has led to this bill being debated today, there has been a failure to properly grapple with the unique nature of super disputes, and the specific powers in consumer protections that are required to resolve them, in a way that is fair, free and accessible for Australians who have complaints regarding their super—and, in a way that, just as importantly, upholds the integrity of the superannuation system more broadly.

This process started with the government wanting a nice announceable of a one-stop shop so it could look like it was doing something about the bad behaviour of the banks. It was initially thought that super disputes could sit alongside all the other disputes and could be seamlessly folded into a private-company-ombudsman scheme. The Superannuation Complaints Tribunal was criticised for its statutory structure. The government argued that the same dispute system that is applied to generic financial service complaints against banks and insurers would work for Australia's superannuation system. But bit by bit, step by step, the value of the Superannuation Complaints Tribunal model and its structure, processes, powers and consumer protections have gradually dawned upon the government. As the serious problems with taking super disputes out of a statutory tribunal kept coming to light, the government started rapidly stitching on more and more powers to AFCA, desperately scrambling to patch up the holes. The result can only be described as a Frankenstein-type body. On the one hand, we have this private company based on contract law; on the other hand, it has statutory government powers for superannuation awkwardly grafted onto it. It's a private ombudsman scheme with statutory powers being progressively transplanted onto it—powers that should rightly belong to a statutory tribunal.

This whole process has been a tacit admission by this government of what should have been clear from the start: that the structure, processes, powers and consumer protections of the Superannuation Complaints Tribunal are the best way to resolve superannuation disputes; that the idea of trying to fold superannuation complaints from a statutory tribunal into a general ombudsman scheme was fundamentally flawed from the start; and that a strong mechanism for the resolution of superannuation complaints, and the upholding of the integrity of the super system, should not have been sacrificed on the altar of this government's desperate need for announceables about the banks so it could continue to protect them from a royal commission.

What has also become clear through this process, and what became even more apparent during the Senate inquiry into this bill, is that there is nothing significantly wrong with the Superannuation Complaints Tribunal that a sustainable funding model wouldn't fix. The only criticism that has been made of the Superannuation Complaints Tribunal is its delays in resolving some disputes. But it's clear that this is the result of a lack of funding and staff cuts. It's worth noting that when looking at all of the disputes that the Superannuation Complaints Tribunal resolves, the average time frame is around 145 days. Nevertheless, there are currently unacceptable delays particularly for the 10 per cent of disputes that go to the final stage—that is, the determination stage. It's clear that the funding shortfalls are the main contributor to these delays. The Ramsay report acknowledged this, as have most stakeholders involved in the consultation over AFCA. Staff cuts and funding reductions have occurred in recent years at the Superannuation Complaints Tribunal. This is despite the fact that the Superannuation Complaints Tribunal funding is already charged to industry by the APRA levy and the increasing size of Australia's superannuation savings.

This government's willingness to oversee a reduction in staff by over 30 per cent at the SCT is an astonishing act of neglect. It is unacceptable for this government to oversee such a dramatic reduction in staff and then to turn around and complain that the Superannuation Complaints Tribunal is too slow in resolving disputes. It's even more unacceptable for this government to then use this as an excuse to abolish the body and transfer its functions to a non-government body, reducing consumer protections in the process.

I foreshadow that Labor will be moving an amendment to retain the SCT as it currently is. This amendment would keep superannuation out of the AFCA. We hope that we'll be able to get senators' support for this amendment, which will protect the integrity of superannuation dispute resolution.

Serious concerns have been raised about the transition arrangements to the AFCA as currently outlined in the bill. The Turnbull government has no plans to ensure that AFCA will have the professional expertise to resolve superannuation disputes. This expertise currently resides in the Superannuation Complaints Tribunal, and it will have to stay there because, under the government's plans, the SCT will stay in operation for a number of years to work through existing superannuation disputes.

We have some further concerns with the issue of moving the handling of superannuation disputes from the Superannuation Complaints Tribunal to AFCA. There are real concerns that there will be little, or possibly no, superannuation expertise on the AFCA board, which will leave superannuation members in a worse position. There have been concerns raised by stakeholders that determinations by AFCA may not even be enforceable against superannuation trustees, who have an overriding duty in common law and under the SI(S) Act.

This bill is more about politics than policy. It's about a government that desperately wants to distract attention from the need for a royal commission into the banks. Aside from increased monetary thresholds, which are still not settled and are not in the bill, there is very little change in this bill for customers who have had a dispute with the banks. They can go to an ombudsman scheme now. AFCA will be an ombudsman scheme as well, and AFCA will have no new powers to deal with these disputes.

As foreshadowed, Labor will move amendments to stop the abolition of the Superannuation Complaints Tribunal to ensure that the quality of superannuation dispute resolution is maintained. I hope the National Party and the crossbench recognise that this is a rushed job by this government to attack superannuation. It will be a problem for superannuation members, and this government is simply displaying its ideological opposition to superannuation for workers in this country. (Time expired)