SABRA LANE:
A wave of litigation is being foreshadowed following the scandals unveiled by the Banking Royal Commission. The corporate regulator, the Australian Securities and Investments Commission, says a large number of investigations are under way as it delivers on the public’s expectation to hold wrongdoers to account. That revelation comes as the Morrison Government this morning has released its schedule for fast tracking new laws stemming from the Royal Commission. The Government hopes about thirty per cent of the changes will be implemented or at least before Parliament by the end of this year, with most changes happening by the end of next year.
Joining us now is the Federal Treasurer, Josh Frydenberg. Good morning and welcome to the program.
JOSH FRYDENBERG:
Nice to be with you, Sabra.
SABRA LANE:
What’s corporate cop ASIC told you about what the court action is planned?
JOSH FRYDENBERG:
Well, there were 20 separate referrals by Commissioner Hayne out of the Royal Commission involving fourteen different entities, so that was well known. And now ASIC have said publicly they have a broader range of cases that they will pursue through the courts. And obviously what we want to see is that the people who are responsible for misconduct be held to account because Commissioner Hayne has identified that that regulators had preferred negotiation over litigation and that the overwhelming number of examples of misconduct were actually in breach of existing law but these people weren’t being held to account, so I think this is a welcome development on behalf of the regulators.
SABRA LANE:
And what cases are we talking about here? AMP, NAB?
JOSH FRYDENBERG:
Well, I’m not going to go in to specifics obviously. There’s a number of sensitive cases and the matter of their timing and the details of those cases and how they are pursued are questions for the regulators themselves and not for the Government.
SABRA LANE:
Alright. Well, ASIC is moving away from so called enforceable undertakings as you just pointed out there, which in the past has seemed to let banks off pretty lightly behind closed doors. How important is it that wrongdoers are punished in the full glare of the public spotlight?
JOSH FRYDENBERG:
I think it is important. I mean, enforceable undertakings have been seen by some as a slap on the wrist as opposed to a much more harsher penalty which can also be a deterrent to future misconduct in the sector.
And what Commissioner Hayne found as he looked at the sector was that there were two recurring themes: dishonesty and greed. And he laid the blame for that dishonesty and greed at the feet of the institutions themselves and their senior management and their boards. There needs to be a realisation on behalf of the sector that they actually need to do better, that they need to put people before profits and the regulators themselves also need to do better to ensure people are held to account for the misconduct that occurs.
SABRA LANE:
Alright. The schedule that the Government’s released today, the Government has been criticised for moving too slowly on the Royal Commission recommendations. You’re flagging new laws, most by the end of next year, is the legislation ready to go now before Parliament?
JOSH FRYDENBERG:
Well, actually we’ve implemented fifteen of the commitments we made in response to the Royal Commission itself. Now, Commissioner Hayne made 76 separate recommendations, 54 of those were directed at the Federal Government, 12 were directed at the regulators, and 10 at the industry themselves.
We’ve already passed legislation, for example, increasing penalties on superannuation trustees, we’ve also passed legislation so that superannuation funds are not inducing employers to make that particular fund the default fund, as well as conducting, under Graeme Samuel, an APRA capability review.
So a lot of work is already being done, but we will have a third of our commitments either implemented or introduced into Parliament by the end of this year. Ninety per cent, or around ninety per cent is the goal by mid next year, and then the remainder by the end of next year.
SABRA LANE:
How confident can the public be that the Government will put their interests first? As CHOICE points out today, industry lobbyists are trying to water down reforms, noting this past weekend, for example, financial advice groups pushed back against new bare minimum education standards for their profession.
JOSH FRYDENBERG:
Well, we’re making it very clear that the public’s interests must come first, and to date, we’ve seen examples where they didn’t come first. I mean, charges to dead people, fees for no service, the mis-selling of insurance were all examples of misconduct and conduct that fell well below community expectations. So, the past is not a good guide to the future. The future needs to be determined by the regulations and the legislation that the Government is introducing into the Parliament, or has already recently introduced, in order to deliver better consumer outcomes. And we believe we can do so in a way that also enhances competition and does not constrain the flow of credit.
SABRA LANE:
By your own benchmark then, you were talking about the past as a good indicator for the future. The Government was dragged reluctantly into holding this Royal Commission. At what point do you think Australians will be able to say, “yeah, the Government’s been decisive about this”?
JOSH FRYDENBERG:
I’m saying the past is not a good barometer for the future and what we need to do is create a new future here for the financial services sector. As you know, we’ve also implemented in, prior to the Royal Commission, a number of important reforms in the sector. The Banking Executive Accountability Regime was put in place by the former Treasurer, now Prime Minister, Scott Morrison, we set up a three, a one stop shop financial complaints system through AFCA, and we’ve also increased the penalties for misconduct on individuals and corporations.
All of that pre-dated the actual Banking Royal Commission, so we’ve actually making a lot of changes because we want to put consumers first and ensure they get a better outcome and we do not see a repeat of the misconduct that was revealed by the Royal Commission.
SABRA LANE:
Commissioner Hayne was quite critical of politics in a speech made last month. He said that the country’s opaque decision making processes were seen by the public as skewed, if not captured by powerful vested interests, while leaders were unable to conduct reasoned debates about policy matters. What did you think about those comments?
JOSH FRYDENBERG:
Well, Sabra, the media didn’t get off lightly either. He was critical of the fact, he said most commentary in the media focused on what divided us, as opposed to what united us. I mean, Commissioner Hayne was absolutely right to say that there is a degree of cynicism with the political process. Now, that’s not necessarily new or not necessarily unhealthy to some extent, but he’s also right that we do need to focus on some of the big issues that are facing our country, and that we need to do that through the political system.
I think the NDIS is a good example of where we have come together as a Parliament to make a major nation enhancing reform, but when it comes to digital disruption, the role of Australia in the region, the changing nature of our energy grid, or indeed the ageing and the growing population that we have, they’re all big issues that we need to have mature conversations about and I think that’s what Commissioner Hayne was indicating.
SABRA LANE:
Treasurer, we’re out of time. Thanks for joining AM this morning.
JOSH FRYDENBERG:
Nice to be with you.