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senate vote 2017-12-06#1
Edited by
mackay staff
on
2023-10-06 10:35:51
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Title
Bills — Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) Bill 2017; in Committee- Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) Bill 2017 - in Committee - Keep parts unchanged
Description
<p class="speaker">Mathias Cormann</p><p>Firstly, I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. I seek leave to move government amendments on sheet HU180 together.</p><p>Leave granted.</p><p>I move government amendments (1) to (16) on sheet HU180:</p><p class="italic">(1) Clause 2, page 2 (table item 3, column 1), omit "33", substitute "32".</p><p class="italic">(2) Schedule 1, item 2, page 8 (after line 18), after paragraph 1051(3) (d), insert:</p><p class="italic">(da) the operator's constitution provides that the Chair of the board of the operator must be an independent person; and</p><p class="italic">(3) Schedule 1, item 2, page 19 (after line 28), after section 1054B, insert:</p><p class="italic">1054BA Power to give directions</p><p class="italic">(1) AFCA may, in connection with, or as part of the process of, determining a superannuation complaint:</p><p class="italic">(a) give directions prohibiting or restricting the disclosure of documents or information relating to the complaint; and</p><p class="italic">(b) give directions as to who may be present at any meeting held by AFCA relating to the complaint.</p><p class="italic">(2) In giving directions, AFCA must have regard to the wishes of the parties in relation to the complaint and the need to protect their privacy.</p><p class="italic">(3) Directions may be made in writing or orally.</p><p class="italic">(4) A person must not refuse or fail to comply with a direction under this section.</p><p class="italic">Penalty: 30 penalty units.</p><p class="italic">(4) Schedule 1, item 2, page 22 (line 4), at the end of paragraph 1055(6) (c), add:</p><p class="italic">or (iv) cancel the complainant's membership of the life policy fund or of any sub-plan of the fund;</p><p class="italic">(5) Schedule 1, item 2, page 24 (line 8), omit "the payment of".</p><p class="italic">(6) Schedule 1, item 2, page 24 (line 12), omit "the person received, from the decision-maker,", substitute "the decision-maker gave the person".</p><p class="italic">(7) Schedule 1, item 2, page 24 (line 16), omit "receiving", substitute "being given".</p><p class="italic">(8) Schedule 1, item 2, page 24 (line 18), omit "receiving", substitute "being given".</p><p class="italic">(9) Schedule 1, item 2, page 24 (line 20), omit "the person received, from the decision-maker,", substitute "the decision-maker gave the person".</p><p class="italic">(10) Schedule 1, item 2, page 24 (line 24), omit "receiving", substitute "being given".</p><p class="italic">(11) Schedule 1, item 2, page 24 (line 26), omit "receiving", substitute "being given".</p><p class="italic">(12) Schedule 1, item 2, page 24 (line 27), omit "received", substitute "been given".</p><p class="italic">(13) Schedule 1, item 2, page 24 (line 32), omit "the payment of".</p><p class="italic">(14) Schedule 1, item 2, page 24 (line 34), omit "receive", substitute "be given".</p><p class="italic">(15) Schedule 1, item 2, page 25 (line 11), omit "the payment of".</p><p class="italic">(16) Schedule 1, item 2, page 25 (line 18), omit "receives", substitute "is given".</p><p>I advise the chamber that this set of amendments makes a series of non-controversial technical amendments to the bill. It also addresses concerns raised by key stakeholders about the bill's initial draft. The government is proposing these amendments particularly in response to the inquiry into the bill by the Senate Economics Legislation Committee. They will provide additional certainty and clarity around aspects of the Australian Financial Complaints Authority's operations to ensure that it operates as effectively as possible. As I have indicated, the amendments are of a technical nature and respond to key concerns raised by superannuation and consumer stakeholders.</p> <p class="speaker">Doug Cameron</p><p>I indicate that we are not inclined to support these amendments. We believe that the amendments that we have put forward on sheet 8284 would be the appropriate way to deal with this. The amendments on sheet 8284 would maintain the Superannuation Complaints Tribunal in its current form, separate from the proposed AFCA ombudsman body. In October last year, under pressure to call a banking royal commission, the Prime Minister promised to establish a new tribunal to deal with financial service complaints and disputes, but this bill does not create a tribunal. We know that the AFCA is not a tribunal like the Prime Minister promised. It's not even a government authority at all. The word 'authority' in AFCA's name is a misnomer. AFCA is just another ombudsman scheme, in the form of a private company, limited by guarantee. It's another FOS and another CIO. Instead of creating a tribunal, this legislation actually abolishes a tribunal already in place.</p><p>Our amendments would protect the tribunal—that is, the Superannuation Complaints Tribunal—that has been there for decades. It's a tribunal that operates effectively when it's properly funded. The government, in our view, hasn't made a case to replace a specialist statutory body with the new AFCA. There are three existing financial sector external dispute resolution bodies. The government is replacing the first two bodies—the Financial Ombudsman Service and the Credit and Investments Ombudsman—with another private company, a limited-by-guarantee ombudsman service. AFCA is a merger and a rebranding. ASIC has confirmed that, aside from potential increases in the value of disputes that can be heard, the new AFCA will not have any new powers to resolve consumer disputes that the first two bodies do not already have. In abolishing the Superannuation Complaints Tribunal, the bill is much more than a rebranding exercise. Labor believes this will weaken protections and outcomes for consumers.</p><p>The design of the SCT recognises that superannuation is not just a regular financial service based on a contractual relationship. The design of the SCT recognises that superannuation trustees are custodians of the retirement savings of millions of Australians. They have obligations to all members, unlike the other two bodies. This bill seeks to replace AFCA. The Superannuation Complaints Tribunal was established as a government statutory tribunal with special powers and expertise to deal with superannuation disputes. The reasons that we seek our amendments are as follows—and I know that's not what's before the chair at the moment, but I just want to explain where we are.</p><p>Firstly, the Superannuation Complaints Tribunal should remain an independent statutory body. It was established in 1993 and has been effective in resolving disputes within super. Super is not just about another financial product and should not be seen as such. The only real criticism that has been made of the Superannuation Complaints Tribunal is its delays in resolving some disputes. But it is clear that this is the result of a lack of funding and staff cuts, including a 30 per cent reduction in staff under this government. There is nothing significantly wrong with the Superannuation Complaints Tribunal that a suitable funding model wouldn't fix. The SCT has the technical expertise needed for complicated super disputes, as do the adjudicators. This is at risk of being diminished over time with a broad complaints body. The SCT has just under 2,500 complaints in 2016, compared to FOS which has 34,095 complaints. There is a real risk of the superannuation industry cross-subsidising dispute resolution for other parts of the financial services sector, which will affect the hard-earned savings of Australians. The need for a special, standalone superannuation complaints tribunal will become even more important as funds within the superannuation sector continue to grow over time. Submissions to the Senate inquiry and hearings made clear that, despite government's attempts to copy and paste Superannuation Complaints Tribunal powers into the new AFCA body, there are a number of important protections and powers that are missing. Despite potential last-minute government amendments, some of these issues remain outstanding—and we've just received further amendments this morning.</p><p>A number of groups, including the Law Council of Australia's Superannuation Committee, the Association of Superannuation Funds of Australia, the Australian Institute of Superannuation Trustees, Industry Super Australia, the Australian Council of Trade Unions, and Chartered Accountants Australia and New Zealand either oppose the abolition of the SCT or have raised concerns about protections that are not included in the new bill or process. Even the SCT chairperson, Helen Davis, told the committee:</p><p class="italic">I don't think it would be true to say, in relation to super, that it's a rebranding exercise. Arguably, it's quite a significant change for superannuation, specifically in terms of the external dispute resolution. It goes from a statutory body to a non-statutory body. It moved from a specialist body to a one-stop-shop body.</p><p>I ask the minister: does the minister agree that this is not a statutory authority?</p> <p class="speaker">Mathias Cormann</p><p>It's a matter of public record: the new Australian Financial Complaints Authority is not a statutory authority.</p> <p class="speaker">Doug Cameron</p><p>So could the minister outline why the government wants to move from a statutory authority to a private sector body limited by guarantee? What are the reasons for this?</p> <p class="speaker">Mathias Cormann</p><p>The government has actually made that point very clear throughout the debate. The government is acting on the independent advice of the expert Ramsay review panel. The Ramsay review recommended an industry dispute resolution scheme as a more flexible and effective model than a tribunal. The overwhelming majority of submissions to the Ramsay review expressed concerns that a statutory tribunal would be legalistic, inflexible and costly, delivering worse outcomes for consumers. Key consumer groups, including the Consumer Action Law Centre, the Financial Rights Legal Centre and Financial Counselling Australia, have indicated that their primary position remains that the best framework for dispute resolution in the financial system is a single industry ombudsman scheme for all disputes, including superannuation disputes. The government's approach will establish a one-stop shop that meets all of the criteria that proponents of a banking tribunal are calling for. AFCA will result in disputes being resolved fairly and efficiently in a less legalistic forum than a court, with access to compensation where consumers have wrongfully suffered a loss and decisions that are binding on financial firms.</p><p>All financial firms will be required to be members of AFCA by law, and decisions made by AFCA will be binding on them. If a financial firm fails to comply with an AFCA determination, AFCA can expel the firm, which would mean the firm would be in breach of its licence conditions. AFCA will be more flexible. Its terms of reference, rather than legislation, will set out, for example, the kinds of disputes it can hear, the remedies it can provide and the techniques it can use to resolve disputes. The flexibility will allow it to address new emerging issues—for example, cases involving the use of non-monetary covenants have been prominent in the debate over industry conduct. The Australian Small Business and Family Enterprise Ombudsman's report on small business loans recommended that banks be restricted from defaulting a loan under $5 million for any reason where a small business has complied with the loan payment requirement and acted lawfully.</p> <p class="speaker">Doug Cameron</p><p>If the amendments on sheet HU180 are agreed to, what are the implications for funding?</p> <p class="speaker">Mathias Cormann</p><p>As I indicated when I moved the amendments, the amendments are essentially of a technical nature and respond to key concerns raised by superannuation consumer stakeholders. Given the question asked, let me go through the amendments in detail. Three amendments change or add wording to the AFCA bill to make it consistent with the language from the existing Superannuation (Resolution of Complaints) Act 1993. One amendment provides AFCA with the power to issues directions aimed at protecting the confidentiality of information in certain circumstances. The amendment also allows AFCA to give directions as to the persons who may be present at certain meetings. This power is supported by a penalty provision. A similar provision is currently in the Superannuation (Resolution of Complaints) Act 1993. One amendment to the AFCA bill includes an ongoing requirement that the AFCA board have an independent chair. Another amendment corrects a typographical error in the bill. In direct answer to the question: these amendments do not go to the funding of the new body; they go directly to the technical issues that I've outlined.</p> <p class="speaker">Doug Cameron</p><p>Thanks for that answer, Minister. The amendments on sheet HU180 would reinforce the proposition in terms of some of the technical issues: the power to give directions, the directions relating to meetings, the cancelling of membership of the life policy fund and the interest in a death benefit. In the context of the overall bill, you indicate that these are simply technical issues. On that basis, we certainly would prefer our amendments. We will be pursuing our amendments on sheet 8284. These are technical issues. They may have to be superseded if we get the numbers on the other side, but, on that basis, we would probably be happy to let this go to a vote.</p> <p class="speaker">Mathias Cormann</p><p>I will just clarify. I fully appreciate the point that Senator Cameron has made. Obviously, the opposition would prefer an alternative approach, which is reflected in your amendments. What I would say, very respectfully, is that, if the bill stands as it was put forward, I believe that the opposition would actually prefer these amendments to pass in case the Labor amendment is unsuccessful. That would be my instinctive view, without wanting to put words into the opposition's mind.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>-
- The majority voted in favour of keeping the following parts of the bill unchanged: division 3 in item 2, and items (5) to (10), (12), (15) to (30), (42), (43), (45), (46) and (52) to (57) of schedule 1, and schedule 3.
- In parliamentary jargon, they voted that those parts "*stand as printed.*" This division was put after NSW Senator [Doug Cameron](https://theyvoteforyou.org.au/people/senate/nsw/doug_cameron) (Labor) [proposed](https://www.openaustralia.org.au/senate/?gid=2017-12-06.29.1) to oppose these parts.
- While opposing those parts, and introducing a series of other amendments, Senator Cameron [explained that](https://www.openaustralia.org.au/senate/?gid=2017-12-06.29.1):
- > *Our position is clear: we think that the Superannuation Complaints Tribunal [SCT] should be maintained in its current position. The complaints tribunal, as I've indicated, has operated for some time. The very fact that the government has tried to replicate the powers of the Superannuation Complaints Tribunal in the AFCA bill demonstrates that the current powers, protections and structures for the SCT are appropriate. In May this year, the draft legislation tried to copy and paste a few of the Superannuation Complaints Tribunal's statutory provisions into the new AFCA [Australian Financial Complaints Authority]. In September this year, the final legislation introduced, copied and pasted, more of the Superannuation Complaints Tribunal's statutory provisions in the new AFCA. Now, after the Senate inquiry and after Labor senators exposed serious flaws, the government has circulated amendments to copy even more of the Superannuation Complaints Tribunal provisions into the new AFCA. The ad hoc process of grafting features of the Superannuation Complaints Tribunal onto the AFCA has been a tacit admission by the government that the Superannuation Complaints Tribunal is a far superior model for resolving superannuation disputes than the private AFCA body.*
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