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Wednesday, 24 October 2018
Page: 11013


Mrs MARINO (ForrestChief Government Whip) (19:14): I'm very pleased to rise to speak on the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018. This bill will ensure that financial products are targeted and sold to the right consumers and that, where products are inappropriately targeted or sold, ASIC will be empowered to intervene in the distribution of the product to prevent harm to consumers. When I consider how we all interact with the financial system and the banking system, it changes throughout our lives. I look back to a small bankbook where we made physical deposits and went into a bank branch to do so. Now we see the credit cards and the current financial products out there. It's a massive change, and they change as our needs change throughout our lives. Whether it's through bank products, insurance or retirement planning, credit cards or loans throughout our lives, in a number of ways we interact constantly with the banking and financial system.

I look back to my own time, initially when my husband and I got married as very young people who decided to take on what was an enormous responsibility: two very young people buying our very first dairy farm. The day that we got married was the actual day that we took ownership of the farm. My husband had been very blunt with me. He said, 'Please don't marry me for my money, because it's all printed in red.' As I've said previously in this chamber, he was entirely correct. It was a great challenge being two young people living in what was a better version of two army huts joined together that had come from the Harvey ag school, from the internment camp where the Italians had been interned during World War II. We didn't have much to work with. It was a great decision to make.

My husband, as a young man, had worked for the local bank branch in Harvey for some time and the opportunity came. He was a passionate farmer. We had a great relationship with the local bank manager. That's what you could do at the time. His name was Mr Roenfeldt. I remember him very well. Here we were, two young kids, and he said, 'I know what you two can achieve.' He had the power of decision-making at the time—that's how it was—and even though Charlie and I had only $12,000 of equity between us, the debt we were taking on in those days was $118,000, which was massive. It was amazing how the world around us said, 'You two kids will fail', but, as the bank manager, Mr Roenfeldt said to us, 'If you do, it'll take you at least two years to go broke, if you go broke—and I don't think you will—and you'll have two years worth of milk in your pockets and it'll give you a start in what's next.' What wonderful advice that was at the time. We took a very direct approach to income generation and keeping our costs low in our business. That's how we were able to grow our business.

There was the relationship with the bank manager. For our decisions, there was us, the bank manager and our accountant. That is what we used to make good decisions for all of our life in business. This was at the time when interest rates, at one point, went from 17 per cent to 23 per cent. When your interest and payments are $1,300 a month and you struggle to earn $2,000 a month in milk, it was a tough ask. We had a rundown old property that we were trying to build up, we had a very rundown herd and very little infrastructure, so it was a really tough job. But, when the next property became available, the bank manager said to us, 'You two kids need to have another go because you haven't got enough dirt where you are. If you're going to expand your business, you're going to need to get into this space.' It was a very direct discussion that we had with him. It took us a lot of years to get a weekend off or a milking off, but that's what it took to start and grow the business.

I must admit that, as you would understand, Mr Deputy Speaker, a lot of people said that we would fail and there were times when we didn't sleep much at night. I see that in so many other small businesses—not just dairy farming or farming but small business altogether—and we rely very much on that relationship with our financial providers, with the providers of loans and others. So it really grieves me when I hear about—and I've seen—the change over the years in how banking services are provided and even the relationships that exist between the customer and the bank itself. I'm really hurt for everyone by the lack and loss of trust and even a loss of respect in our banking sector and the loss of those very close relationships that we were able to work with in those early years. I believe that there are still people who have very sound relationships with their financial service providers and banks, and they are able to do very good business that supports what they need to do as well. But I'm also concerned, I must admit, that there doesn't appear to be a lot of respect in the banking sector for customer loyalty. That's something that we've noticed even in our own business over the years. We've heard a lot of evidence at the royal commission that's concerned so many of us.

The new laws ensure that financial service providers have a very customer-centric approach to making initial offerings of products to consumers, like the product that Mr Roenfeldt offered us all those years ago when we were two young people trying to start a business and we needed good and sound advice. We depended on that good and sound advice from that local bank manager, and that's what we got. It was almost as though he was as invested in our business because he was local, because he cared and because he could see two young people having a red-hot go. He was very much part of our early journey. I know we lost Mr Roenfeldt a lot of years ago, but I want to thank him and those bank managers like him who actually were and are there for people like us who are having a go.

This new law also will give ASIC the powers to enforce new arrangements, which include the ability to request necessary information and, where necessary, issue stop orders where there is a suspected contravention of the law, and to make exemptions and modifications to the new arrangements. The government is acting in way that will give far more confidence and opportunities to people like us, starting out in business or already in business, and to people who are consumers just seeking a credit card or simple banking products.

There will be and are, as a result of this bill, civil and criminal penalties applying to contraventions of the new arrangements. The combination of civil and criminal penalties allows ASIC or the prosecutor, as the case may be, to take a proportional approach to enforcing the new obligations, and they are, as I said, important.

Equally, while the royal commission is continuing, the government through legislation like this is strengthening our financial laws to ensure that banks and financial institutions are actually held to account. We are getting on with the job of protecting consumers—consumers just like me and my husband in those early years. I see great young people and small-business people out in my community who are doing exactly what we did a number of years ago. They need to have just as much confidence in the providers of their financial products as we had in our local bank manager.

This particular treasury laws amendment bill is yet another step. It's targeted so that these products are those that are appropriate, and, if they are inappropriate, ASIC can, of course, step in. It fulfils the government's commitment to implement two recommendations from the Financial System Inquiry. The design and distribution obligations and the product intervention power will ensure that financial products are targeted and are sold to the right consumers. Whoever walks in the door of those institutions, or however they take those products and access those products, the products need to be the right products for that particular consumer. Whether you're a farmer or a small-business person or someone requiring a number of services from an institution, they need to be the right ones for you, and you need people to deal with who are prepared to provide that level of service.

This was particularly relevant in the examples we saw in the royal commission, where products that were totally inappropriate were sold to unsuspecting people—for instance, the fees for no service. This resulted in the most severe financial difficulties for people, where they couldn't meet the obligations they had signed up for. Where products are inappropriately targeted or sold, ASIC will be empowered to intervene. That intervention power will only be used to prevent harm to consumers. We want to avoid instances like those raised in the royal commission.

I want to see more people have the confidence that we did back when we bought our first property. Our government is committed to fostering an environment where businesses adopt and maintain a customer-focused culture, a customer-centric culture, where the relationship is a trusting relationship and where the advice provided is the best advice for the consumer's particular circumstances, where we, as the users of those particular products, can have a fair go and actually have confidence that the advice we're being given is the right advice and the right product in the particular circumstance.

Our approach to banking and financial services reform has focused on ensuring that the financial system is resilient, efficient and fair. We all interact with the banking system, and these reforms will benefit every single one of us. It means that we can approach the financial system with far more confidence that those who we're dealing with in the financial sector have genuinely approached the product that we're seeking with us the consumers in mind. In the same way that we went to see that wonderful bank manager, Mr Roenfeldt, all those years ago and said, 'We want to buy a dairy farm. We want to build a business. We want a future in this community. There are a range of products that we are going to need throughout our life, and we need a bank or a lending facility to help us through that,' I want others to have the confidence we had in that relationship and in the products that we got. There were things we could and couldn't control, as I said, throughout that process, with interest rates et cetera, but the actual products that were designed and the discussions that we had with our institution meant that it was almost like we were in it together—and that's how it should be.

The government is really determined to encourage issuers and distributors to have an absolute customer-focused approach when they're designing, when they're marketing and when they're distributing financial products. I'd ask each one of those people, with whatever product they're providing or offering to the consumer—at the desk, at the table, online or wherever it is—to put themselves in the consumer's position and think: 'If it was me, what is the product that I would need to be able to do my business, to be able to stay in business, to be able to grow my business or to simply be able to access something as simple as a credit card?' We know only too well what happens if that's not the case, and ASIC will be in a position to intervene should that be necessary. This bill sets out exactly how and when ASIC will be able to intervene. The product intervention powers are a really important part of this bill before the House this evening.