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Thursday, 30 September 2010
Page: 483

Senator XENOPHON (2:42 PM) —My question is to Senator Sherry, the Minister representing the Assistant Treasurer and Minister for Financial Services and Superannuation. Almost 200,000 Australians have signed up to a class action against Australian banks to recover almost $300 million in unfair bank fees, such as late credit card payments and account overdrafts. In some cases, customers can go just $1 over the limit yet the bank will penalise them for $30 or more. I note the current campaign on such fees is being spearheaded by Choice, the Australia Institute and GetUp!. My question is: why has it taken individuals to launch litigation against banks to stop this unfair behaviour, rather than the government legislating for fair treatment of bank customers?

Senator SHERRY (Minister for Small Business, Minister Assisting on Deregulation and Minister Assisting the Minister for Tourism) —Thank you, Senator Xenophon; I am very glad you have asked this question. Firstly, it is on the issue of a case I cannot go to because it is before the courts. What I can say—and I will outline it in great detail—is that the government has legislated. In fact, the Labor government has carried out the most extensive legislative overhaul of financial consumer credit laws this country has seen in 100 years, and they commenced on 1 July 2010 so I do not accept the assertion in the last part of your question.

The new laws include wide-ranging powers to overrule unfair terms in credit contracts. The National Consumer Credit Protection Act 2009 commenced on 1 July 2010. It provided a simpler standard national regime for consumer credit regulation and it also implemented new responsible lending obligations to help protect consumers from taking on more debt than they can afford. This reform package I might say, with some modesty, began when I was the Minister for Superannuation and Corporate Law—

Senator Carr —Don’t be modest about that.

Honourable senators interjecting—

Senator SHERRY —and I had policy responsibility for the transfer of—

Senator Abetz —Why were you dumped?

Honourable senators interjecting—

The PRESIDENT —Are we finished? On both sides?

Government senators interjecting—

The PRESIDENT —Senators on my right! When we have silence we will proceed. Just wait, Senator Sherry, you are entitled to be heard in reasonable silence.

Government senators interjecting—

The PRESIDENT —Senators on my right! I am waiting to call Senator Sherry to continue his answer.

Senator SHERRY —Senator Abetz interjected. He has been promoted, but he has been promoted in opposition. I know where I would rather sit, mate. It is on this side of the chamber—government and minister. Promotion in opposition is not much fun, Senator Abetz. With the National Consumer Credit Protection Act 2009, as I have said, the new laws on consumer credit are the toughest Australia has seen.

Senator Ian Macdonald interjecting—

Senator Payne —Show that face to the Australian public, they’ll love it.

Senator SHERRY —It is a matter of reality, Senator. Back to the consumer credit regulation—(Time expired)

Senator XENOPHON —Mr President, I ask a supplementary question that may assist the minister. Is the minister saying that the new national consumer credit laws would mean that there could not be a class action of the type that has been brought against the banks?

Senator SHERRY (Minister for Small Business, Minister Assisting on Deregulation and Minister Assisting the Minister for Tourism) —As I have said in respect of the class action which is before the courts I cannot make comment about that. That is the choice of a group of individuals who have decided to initiate legal action. What I am outlining—refuting the commentary in the third part of your initial question—relates to the claim that the government has not taken legislative action. The government has taken the most extensive legislative action in respect of financial services and consumer credit that we have seen in 100 years. It has transferred, strengthened and introduced single standard national financial services legislation and consumer credit legislation, which I was attempting to outline in greater detail until there were a number of interjections. It has carried out the most extensive reform in over 100 years. I think from recollection you took part in the debate, Senator Xenophon; I am a little surprised—(Time expired)

Senator XENOPHON —Mr President, I ask a final supplementary question. The government made a number of election commitments in support of bank customers including changing the way interest is calculated on credit card debt so that customers pay off the highest debt first not the debt accruing the lowest interest and restricting the practice of unsolicited credit card limit increases. Could the minister outline the details and time frame of implementing these election commitments?

Senator SHERRY (Minister for Small Business, Minister Assisting on Deregulation and Minister Assisting the Minister for Tourism) —Thank you again for the question and the supplementary question. Yes, we made a number of specific commitments making sure that when customers pay down their credit card it is applied first to the part of the credit card debt that is accruing the biggest interest not the least interest, ensuring credit card customers cannot exceed their credit limit unless they have already expressly agreed they want to be able to, and prohibiting credit card companies from offering higher credit limits without the cardholder’s request. We intend to go further with our overhaul and provision of tougher new consumer credit laws in respect of financial services. As I was about to say before I was interrupted, we have delivered on phase 1 of the consumer credit reforms. In phase 2 we will consider the need for the regulation of lending to small businesses and improvements to the regulation of credit cards. The reforms will be delivered in two tranches. The most urgent projects will be completed in mid-2011 and the more in-depth—(Time expired)