SABRA LANE:
Josh Frydenberg, good morning and welcome.
JOSH FRYDENBERG:
Good morning to you Sabra.
SABRA LANE:
These banks and financial institutions have destroyed people’s lives, and cost people, some of them, their savings. How long will it take before customers have recompense and the banks don’t prolong this process any further than necessary.
JOSH FRYDENBERG:
Well in terms of holding people to account, that is now being done by the referrals from Commissioner Hayne to the relevant authorities…
SABRA LANE:
We’ll get to that in a tick.
JOSH FRYDENBERG:
…We have announced that we’re establishing a compensation scheme of last resort, through the Australian Financial Complaints Authority, a body that we have set up, a body that was endorsed by Commissioner Hayne. And we will ensure that people have their opportunity to be heard for cases going back a decade, which coincides with the period that was looked at by the Royal Commission. And in those cases, if judgements are made in favour of those particular individuals who have suffered misconduct and harm they will be compensated.
SABRA LANE:
Some people have waited years already, are they going to have to wait a decade more?
JOSH FRYDENBERG:
Well what we have already said yesterday, was that there will be $30 million dollars made available…
SABRA LANE:
But the timeframe? That’s what I’m getting to.
JOSH FRYDENBERG
: …well that money will flow. But in terms of going forward, in terms of the cases that haven’t been heard, that is now going to happen over the course of the next 12 months.
SABRA LANE:
But you wouldn’t want that dragged out for a long time?
JOSH FRYDENBERG:
Absolutely not. These people are entitled to have their cases heard, and where they have suffered harm as a result of the misconduct by their financial institutions, compensated.
SABRA LANE:
The Bankers’ Association’s Anna Bligh was very contrite yesterday, big mea culpa on behalf of the banks…
JOSH FRYDENBERG:
And so she should be.
SABRA LANE:
…Banks. Have they done enough? The Commissioner was pretty blunt yesterday about the National Australia Bank, and Ken Henry and Andrew Thorburn.
JOSH FRYDENBERG:
Well this is just the start of the road back on behalf of the banks to win the trust of the Australian people. The recommendations are very important that’s why…
SABRA LANE:
Have they been contrite enough?
JOSH FRYDENBERG:
…Well I think that they’ve said the right things, so far, but it’s now a question whether they will do the right things. And the culture must start, the culture of change, must start within those financial institutions. Commissioner Hayne was very clear, that it’s those entities responsible and their boards, and their senior executives, who need to be held to account for the consequences of their decisions. Now it’s up to those financial institutions to ensure that the culture changes, that the misconduct doesn’t occur again, and that the performance is in the best interests of the consumers.
SABRA LANE:
Well the NAB board is meeting today. Should Andrew Thorburn go?
JOSH FRYDENBERG:
Well Sabra it’s not for me to opine on the individual cases.
SABRA LANE:
You don’t have a view?
JOSH FRYDENBERG:
…. Of financial institutions. Well my view is that those decisions should be left to the board themselves and the shareholders, based on what they think is in the best interest of their customers and their company.
SABRA LANE:
Well let’s put it this way. Should NAB customers and shareholders now demand that the board take action?
JOSH FRYDENBERG:
Again, that is a question for them.
SABRA LANE:
When is…many people would be really puzzled. Why is sorry the hardest word for the Government?
JOSH FRYDENBERG:
Well, we’re looking to the future, and we’re the ones who actually announced yesterday that we are going to take action on all 76 recommendations. I want to point out that when we came to government we actually out in place the Murray Financial Systems Inquiry that has led to a number of important reforms, like the Banking Executive Accountability Regime, which was endorsed by Commissioner Hayne which is making a difference too…
SABRA LANE
: Sure… you can point to that record. But a lot of people are going to be thinking about the 18 months that this government pushed back against the Royal Commission, in fact 26 times you voted against it. A lot of people remember that. If the banks have been contrite, why won’t the government just simply say sorry?
JOSH FRYDENBERG:
Sabra, the conduct that we’ve heard through the Royal Commission has been going back years. And on Bill Shorten’s watch, when he was Financial Services Minister, you had major financial scandals. When Labor was in government…
SABRA LANE:
…Sure, and I will ask him that when he’s in the studio, but what about you and this government?
JOSH FRYDENBERG:
Because the clear point is, we’re the ones who called the Banking Royal Commission, we’re the ones who announced yesterday that we’re taking actions on all 76 recommendations, we’re the ones, who have put in place important reforms and we are the ones who are going to offer banking customers a compensation scheme of last resort.
SABRA LANE:
Again, why is sorry the hardest word?
JOSH FRYDENBERG:
Well, my message to the Australian people is that we are on their side to get better consumer outcomes to deliver a financial system that is working for all of them.
SABRA LANE:
The Commissioner was pretty damning of the regulators, that they were just way too timid. Why should the public have faith now that these regulators are going to follow through and prosecute, given the report’s criticism?
JOSH FRYDENBERG:
Well, you are right. They were too timid and they were preferring negotiation over litigation and Commissioner Hayne did find them wanting. But, he did say yesterday in his report that they have changed their approach. We’ve put in new leadership in ASIC, a new Chairman and two new Deputy Chairs and we have provided
$170 million of additional funding to our regulators and our law enforcement agencies, and I am confident that they will be up for the task.
SABRA LANE:
What personal assurances have you had from ASIC and APRA, Wayne Byers and James Shipton, that things are changing?
JOSH FRYDENBERG:
I’ve spoken to both of them, as well as yesterday, Daniel Crennan QC, they assured me that they are very focused on the task ahead.
SABRA LANE:
And, they’ve given you an assurance that the watchdog are getting teeth?
JOSH FRYDENBERG:
Well, this is a really interesting point because what Commissioner Hayne found was that the misconduct that occurred was largely in breach of existing laws…
SABRA LANE:
Correct.
JOSH FRYDENBERG:
…And so, the regulators weren’t taking the necessary action to hold these people to account. What they have assured me, as regulators, is they’re very focused on ensuring that the people who have engaged in misconduct, and those entities, are held to account.
SABRA LANE:
ASIC, yesterday, ordered the Commonwealth’s financial planning arm to stop charging fees and stop taking new clients as part of an enforceable undertaking because it simply wasn’t moving fast enough. Is that a sign of the kind of muscling up that we are going to see now from the regulators?
JOSH FRYDENBERG:
Well, I think you are going to see a much more forward leaning approach on all of these issues.
SABRA LANE:
A new assessment board which will supervise APRA and ASIC, seems like it will operate in secret. What is the point of that, given that the Royal Commission has been the best proof that sunlight is the best disinfectant?
JOSH FRYDENBERG:
Well, this new oversight board will be reporting to Government and Government’s don’t operate in secret. We, as politicians and Ministers and Treasurers and Prime Ministers, we are accountable to the Australian people. What we will ensure is that ASIC and APRA are operating as effectively as possible in the best interests of Australians, and we will make whatever reforms are necessary to ensure that occurs.
SABRA LANE:
Alright, we are nearly out of time. I just want to ask you about your own battle in the coming election, in your electorate. You are now facing a challenge from Oliver Yates, an independent, who says that voters should turf you out because of your inability to convince the Government to take effective action on climate change, how serious a threat does he pose to you?
JOSH FRYDENBERG:
Well, I have faced a contest in all the three elections that I have won since coming to office. I look forward to the next contest. What I will continue to do is to deliver for the more than 20,000 small businesses in the electorate and the more than 30,000 school students, the volunteer organisations like Guide Dogs and the shelter that I have helped provide for women who have been suffering domestic violence. I have got a good, strong local track record and I will be making the case to the people of Kooyong between now and the next election.
SABRA LANE:
Treasurer, thanks for joining AM this morning.
JOSH FRYDENBERG:
Always good to be with you.