DAVID KOCH:
Josh Frydenberg joins me now from Canberra, Treasurer, thanks for your time.
JOSH FRYDENBERG:
Good morning, Kochie.
DAVID KOCH:
Are you stunned and what this Royal Commission found out about our banking system?
JOSH FRYDENBERG:
I think everybody is shocked by revelations of fees for no service, fees charged to dead people, the misselling of insurance, policies that people couldn’t even claim again and then those horrible audio recordings of a young man with Down syndrome being sold insurance that he didn’t need, that he didn’t want and that he didn’t understand. So, I think the culture of conduct and compliance within the financial system certainly needs to get better and improve.
DAVID KOCH:
Do you personally feel betrayed? Do you feel conned? Because you’ve been an apologist, a defender for the banks, your government has for so long, you didn’t want this Royal Commission. Do you feel betrayed personally?
JOSH FRYDENBERG:
I’ll just pull you up there, Kochie, I think that’s a ridiculous statement…
DAVID KOCH:
Why?
JOSH FRYDENBERG:
Because let me tell you why. Let me tell you why…
DAVID KOCH:
Don’t you blame Labor for this
JOSH FRYDENBERG:
…no because…
DAVID KOCH:
You’ve been a defender of them.
JOSH FRYDENBERG:
Let me point out that when Labor was last in office they had the financial scandals of Trio and Storm, and Opes Prime and they did nothing, now we called the financial…
DAVID KOCH:
You did not want the banking Royal Commission
JOSH FRYDENBERG:
…we called the financial system enquiry with David Murray; we’ve been implementing and introducing reforms…
DAVID KOCH:
Did you want the Royal Commission?
JOSH FRYDENBERG:
Well certainly we’re the ones who announced it…
DAVID KOCH:
Did you want it though? You announced in under pressure, you’re just saying you’re stunned by the findings. You have to be betrayed, you wouldn’t have thought it was as bad as this?
JOSH FRYDENBERG:
I think everybody has been surprised by some of the things that they’ve heard through the Royal Commission, but the important thing is to look forward to the future. And that is why our announcement about the 76 recommendations that we taking action on will lead to a better outcome for consumers. But it’s important to note that Commissioner Hayne did endorse a number of reforms that the government has already introduced.
DAVID KOCH:
Do you agree with him, that criminal proceedings should be brought against some organisations and their executives?
JOSH FRYDENBERG:
Look, again, it’s not for me as Treasurer to comment on individual cases, other than to say that more than 20 referrals have been made. ASIC and APRA, and I’ve spoken to the heads of both organisations are very seized of the importance of these issues, and ensuring that people are held to account for misconduct.
DAVID KOCH:
They must be pretty embarrassed as regulators, because the report was scathing on them not doing enough and uncovering this.
JOSH FRYDENBERG:
Well certainly they were too timid, and that was the findings of Commissioner Hayne, that there was a preference for negotiation over litigation. He did comment yesterday, Kochie, that he has seen an improvement within these organisations and regulators. We’ve given them an extra…
DAVID KOCH:
God, you’d hope so
JOSH FRYDENBERG:
… absolutely. Absolutely.
DAVID KOCH:
And look, mortgage brokers. At the moment you go to a mortgage broker, they get paid by the lender. The recommendation is that you, the consumer, pay them, they just get a fee. Are you going to take up that recommendation?
JOSH FRYDENBERG:
Well what we’ve said is we’re going to implement the recommendation of Commissioner Hayne to establish a best interest duty, and we’ll see how that works to change the behaviour within these mortgage brokers. And in three years’ time, we will do a review to see. It’s important to point out that Commissioner Hayne’s finding about that change, was different to what the Productivity Commission, the Murray Review and the Sedgwick Review all found, which was if you did change that fee for service model, then you’ll end up giving the banks more power, and we don’t want to see 25,000 small business people affected and the big banks given a free kick.
DAVID KOCH:
Ok, Treasurer. Everyone’s watching closely, thanks for your time.
JOSH FRYDENBERG:
Good to be with you, Kochie.