THOMAS ORITI:
The Federal Government has stepped back from its commitment to establish a banking tribunal, now claiming it was talking about a small T tribunal and not a big T tribunal. The Minister for Financial Services Kelly O'Dwyer has just released a report for the Government by noted business academic Ian Ramsay suggesting a new ombudsman is a better way to go. In October, the Prime Minister said the Government was working toward a tribunal amid calls from Labor and some on the Coalition backbench to establish a royal commission into banks.
Ms O'Dwyer spoke with our political reporter Tom Iggulden.
KELLY O'DWYER:
What this report does is it gives very clear instructions to the Government that the best way to resolve consumer complaints is to make sure that there is a one stop shop for consumer complaints handling.
TOM IGGULDEN:
And it clearly favours, in that instance, an ombudsman as opposed to a tribunal, would you agree?
KELLY O'DWYER:
This is precisely what we asked the Ramsay review to consider. We said to them it was really important that consumers have access to justice in a timely manner, that they get an independent determination of their disputes and that there is a robust compensation scheme. We said the design of that scheme should be absolutely up to them to tell us what was going to be best in consumers' interests.
TOM IGGULDEN:
So was the - I'm going to read you now some words from the Prime Minister in October. He said: what we are working towards is having one tribunal that deals with those matters. Is that now not the commitment?
KELLY O'DWYER:
When the Prime Minister was talking about a tribunal, I would suggest to you it was a small 'T' tribunal, which is a catch-all for having a one stop consumer complaints shop. We have always said, and the Prime Minister and all of the members of the Cabinet - in fact, every member of the Government has been consistent that this is all about making sure that consumers have got access to justice in a timely manner and have got a robust compensation scheme that sits behind it.
TOM IGGULDEN:
But you wouldn't accept, would you, that there's a big difference between another ombudsman - we already have two ombudsmen in this area - and a tribunal?
KELLY O'DWYER:
Well one is far more legalistic, which means that it is probably less consumer friendly, and that is a big 'T' tribunal. That makes it I think more difficult for consumers to engage, which is what the report has found, rather than an ombudsman which is more flexible and can give people the opportunity to get a much more timely resolution.
TOM IGGULDEN:
But there was no discussion at the time about the difference between a big T and a little T tribunal. This is going to take people by surprise, isn't it?
KELLY O'DWYER:
No, not at all Tom, in fact far from it. This is entirely consistent with what we set out in April when we said there is a significant issue here that we need to deal with, and that is that consumers need to be able to know that they have a very easy resolution to their consumer complaints. If they've not been able to resolved with the financial institution, they need to be able to have it resolved by an independent third party without the need to go through very expensive litigation and the court process. Now this is what is being delivered today. It is a terrific report, it is exactly what the Government has set out, it is entirely what we have asked Professor Ramsay and the expert panel to do, and I think consumers will welcome this with open arms.
TOM IGGULDEN:
The parliamentary inquiry that looked into this certainly did recommend in very straight terms a tribunal as opposed to another ombudsman; so you are going to ignore that recommendation, are you?
KELLY O'DWYER:
I think if you actually have a look at the report this has actually referred to, where they refer to the recommendations made by the House Standing Committee on Economics, and they say that the thrust of the recommendations made are entirely consistent with what the Ramsay review has provided to the Government…
TOM IGGULDEN:
Well it says in fact that the Government amend or introduce legislation if required to establish a banking and financial sector tribunal. This tribunal should replace the financial ombudsman service et cetera. So there it is, clearly spelling out that there shouldn't be another ombudsman; it should be a tribunal. Again, are you going to ignore that recommendation?
KELLY O'DWYER:
Well, what the Ramsay review has found is that the panel observed that many of the committee's recommendations in terms of the features of the body are consistent with the panel's draft findings, and they...
TOM IGGULDEN:
Well it wouldn't be established by legislation though, would it, an ombudsman?
KELLY O'DWYER:
It would be an industry funded body...
TOM IGGULDEN:
Not established by legislation, again...
KELLY O'DWYER:
Would need to be ASIC approved. Look, let's look ahead of ourselves here, Tom. I mean, we have had draft recommendations provided to us, very excellent recommendations provided by Professor Ramsay. I know you'd like to sort of say that there's somehow an inconsistency here - there isn't. I mean, the Government has been consistent all along. We want consumers to be able to access justice in a quick and timely manner, and we want them to be able to access compensation in a quick and timely manner.
The truth is that many people who are in financial disputes are under extreme pressure, they can't resort to the court process. Many of them are currently excluded by the ombudsman process right now because the monetary thresholds are too low and the access to compensation is also too low. This report suggests that we should increase the monetary limits and the compensation caps, which will give better access to consumers to an ombudsman service, a single service for financial, credit and investment disputes, and it will also mean that small businesses that previously might have been excluded under the current caps will be included, and therefore their resolution to their disputes will happen.
THOMAS ORITI:
That's the Financial Services Minister Kelly O'Dwyer speaking with our reporter Tom Iggulden.