OLIVER PETERSON:
We very much appreciate the Financial Services Minister Kelly O'Dwyer's patience because Minister you're going to be introducing corporate cops into our banks. I appreciate your time on Perth Live – good afternoon.
KELLY O'DWYER:
Great to be with you Ollie.
OLIVER PETERSON:
Alright, corporate cops going into the bank – how is this going to work?
KELLY O'DWYER:
Well the new Chair of ASIC has said that we need to take a new supervisory approach in respect of Australia's five largest financial institutions, which means the big four banks plus AMP. And so for the first time we are going to have ASIC staff appropriately embedded in these financial institutions, the corporate cop on the beat in the institution, much as they have done in Hong Kong, in the UK and in the USA.
OLIVER PETERSON:
Alright, are they going to be undercover Minister or will all of the staff know who they are?
KELLY O'DWYER:
No, they are going to be very clear with who they are. But the point of this is to make sure that our regulator can be not just reactive but also very proactive. We want to make sure that the misconduct that we have heard so much about will be minimised and hopefully prevented in the future as a result of having the regulator actively engaged in some of our biggest financial institutions and seeing the potential for harm and stopping it in its tracks.
OLIVER PETERSON:
So will these cops just be lingering over the shoulders of bank employees making sure they're doing the right thing – they're not charging, for example, customers fees for no service?
KELLY O'DWYER:
Well they won't be charging fees for no service but James Shipton, the new Chair of ASIC, who we recently appointed to take on this responsibility, he has been able to demonstrate that when he was a regulator in Hong Kong this is a very effective mechanism to root out misconduct and to make the regulator far more agile. And where there is concern in a particular financial institution he has said that he will focus the energy of his staff on making sure that they can ensure that there isn't inappropriate behaviour or misconduct occurring there and if there is making sure that it stops and that further consumer harm doesn't happen.
OLIVER PETERSON:
Of course the banking Royal Commission continues and we heard from the boss of NAB today that fees were charged for services that then they effectively tried to cover up and see if they could charge for a service but in the end had to refund their customers. Is this becoming an all-too-familiar story though out of the Royal banking Commission? Understandably customers and many Australians are feeling pretty frustrated by this Minister. Do you believe putting corporate cops, and also the productivity commission last week saying an integrity officer, will be going into the banks will allay the fears of the customers?
KELLY O'DWYER:
Well without commenting on the specifics of the Royal Commission because obviously that's independent of government, let me make a broader comment and say this, it is unacceptable for financial institutions to be charging fees when not providing the service and we have already seen compensation orders made, undertakings provided to the corporate regulator, and we have seen payments made to those customers who have been affected. But it is simply not good enough and it must not happen in the future and that's part of the reason the Government have been working so hard to make a substantial number of changes. The first, of course, is the Banking Executive Accountability Regime so that within these organisations it is very clear who is actually responsible for what within the financial institution. We also need to make sure that the regulator has got the powers it needs to be able to do its job and the criminal and civil penalties when misconduct is found that they can apply to the financial institution. Now, some time ago we set up a task force to actually look at those penalties, the enforcement task force, and we have already made announcements where we have strengthened the penalties that will be applied for misconduct for financial institutions and breaches of the corporation act more broadly, and it can mean in some cases up to 10% of the turnover of the financial institution.
OLIVER PETERSON:
Is this about trying to restore customers’ confidence in the banks?
KELLY O'DWYER:
Frankly, the banks themselves need to restore customer confidence. They need to be able to restore trust when that trust has been breached. Our job as the Government is to make sure that the regulator is a tough cop on the beat, that it's got the resources, the powers and the leadership to be not only a reactive regulator but a proactive regulator and today's announcement helps them to do just that.
OLIVER PETERSON:
And being a proactive regulator will that woo the cross bench to support the company tax policy that the Government is going to try and push through again in the coming weeks?
KELLY O'DWYER:
Well I'm not sure that they are going to see that as linked. This is something entirely independent.
OLIVER PETERSON:
But people like Derryn Hinch though, for example, have said if you decide to forego the banks in the company tax cut policy he may support it so are you trying to woo him with these announcements Minister? Both yourself and the Treasurer have been out and about the last couple of days.
KELLY O'DWYER:
I have got to say that these announcements, as I said, are entirely independent of that. We have received a strategic review that our new Chairman has done in terms of what he would like to do in terms of changing the direction of the regulator to make it more agile and this is part of his new supervisory approach. We have also had a plan from him to accelerate and increase the intensity of the enforcement activities and recognising that you've got big opponents, obviously, when litigation occurs, to provide them with additional monies so that they can combat that and bring cases against well-funded litigants through our enforcement special account and making sure as well that we are looking after small businesses and making sure that those small businesses that have got a problem can be appropriately dealt with as well.
OLIVER PETERSON:
Okay and before I do let you go – on the company tax policy do you think the Government should push ahead with this, try and introduce it into the Parliament when you resume?
KELLY O'DWYER:
Well look, in terms of management of the Senate that's very much outside of my purview, that's a matter for my colleagues Mathias Cormann and Mitch Fifield. The Senate is a mystery to those members of the House of Representatives. But I would say that it is clear that Australia needs to be competitive internationally. We need to be able to continue to attract global capital. In 2001 when we reduced the company tax rate there were 19 other countries in the OECD that had a higher corporate tax rate than we had in Australia, now it's only two. We need to make sure that we have got the investment we need in our companies to be able to grow them and to be able to employ more people in this country.
OLIVER PETERSON:
So in other words push ahead with this?
KELLY O'DWYER:
At the end of the day we recognise how critical it is to deliver corporate tax cuts. It's been incredibly good for small and medium-sized enterprises but we need to go further. It has only been cut to 27 and a half cents in the dollar. It needs to go down to 25 cents in order to really be on par with a lot of the world.
OLIVER PETERSON:
Okay but if you can't get any Senate cross bench support would you abandon the plans, do you believe, and take it to the election?
KELLY O'DWYER:
Well let's see what happens in the Senate and we've got Parliament resuming very shortly – you won't have long to wait.
OLIVER PETERSON:
Alright – I'm holding my breath. Kelly O'Dwyer thank you very much!
KELLY O'DWYER:
Thanks very much Ollie.