5 February 2019
Transcript - #2019018, 2019

Doorstop interview, Parliament House, Canberra

Subjects: Government response to Final Report of the Royal Commission into Misconduct in the Banking, Superannuation & Financial Services Industry.

JOSH FRYDENBERG:

Good morning. Yesterday, the Government announced that it is taking action on all 76 recommendations from Commissioner Hayne. These recommendations are vitally important if we are to rebuild Australian’s trust in our financial system. Our focus is on delivering better consumer outcomes so that Australians feel that they are treated honestly and fairly by their financial institutions. We’re also focused on ensuring the flow of credit continues in the economy, as well as maintaining competition and indeed (inaudible) where possible. The recommendations that we have accepted from Commissioner Hayne will protect consumers’ interests. They will build accountability in the system, they will enhance the effectiveness of our regulators and importantly, they will provide a compensation scheme of last resort, providing a means of redress for the people who have suffered misconduct in the financial system. These people’s cases now going back a decade will be heard and where there are decisions in their favour, compensation will be paid. And importantly, it will be paid by those who are responsible for that misconduct.

Yesterday’s report that was released from the Royal Commission is a landmark report and it is the start of a process to restore the public’s trust in our financial institutions.

QUESTION:

Treasurer, you didn’t want this Royal Commission. How can we trust the Coalition to fix the banks?

JOSH FRYDENBERG:

Well, we are the ones who are focused on the future. We are the ones who have announced yesterday that we are taking on action on all 76 recommendations. The Coalition is the Party that has implemented reforms out of the Financial Systems Inquiry that were endorsed yesterday by Commissioner Hayne, including the Banking Executive Accountability Regime and the Australian Financial Complaints Authority, among others. In a number of cases, we are going further than even Commissioner Hayne had recommended, both in relation to the Financial Complaints Authority, the extension of the Executive Accountability Regime and also, with the Product Intervention powers. And we’ve made a major announcement yesterday, too, that we are extending the jurisdiction of the Federal Court to cover corporate criminal conduct. Because, currently those cases are heard within state courts, and commonly it takes more than two years for a case to be heard.

QUESTION:

Upfront fees, will you be banning those?

JOSH FRYDENBERG:

In relation to mortgage brokers what we have said, is that we want to see what the impacts would be on such a change, bearing in mind that the Productivity Commission, the Murray Review, the Sedgwick Review, all said, that there would be a negative impact on competition, were you to move to a change in that fee model. The key focus for us is not to enhance the power of the banks, if you were to change those fee service models, it would hurt some of the smaller lenders, and the big free kick would go to the banks.

QUESTION:

But doesn’t that open you up, heading into the Election, Labor can say they would commit to all the recommendations in full, you’re only committing to 75 and a bit.

JOSH FRYDENBERG:

We are taking action on all 76 recommendations, that’s our focus. We are delivering a better outcome for Australian consumers. With regards to mortgage brokers, we’re also focusing on these more than 20,000 small businesses. We don’t want to give a free kick to the big banks, and the Productivity Commission, the Sedgwick Review and the Murray Review, have all been very about the impact on competition that such a change could make. So we have said that in three years’ time, when we have put in place that best interest duty and we’ve allowed it to take effect, that we can see what the impact of a change to a fee model as proposed by Commissioner Hayne. I’ll just take two more questions.

QUESTION:

Should both major parties consider no longer accepting political donations from the major banks to make a statement that you are serious about reform?

JOSH FRYDENBERG:

Well my point about that is the Labor Party have been receiving plenty of donations from financial institutions. The issue is about adherence to the law and ensuring that those donations are disclosed as appropriate and in accordance with the requirements of the Parliament. But also these are publicly listed institutions. They’re accountable to their shareholders.

QUESTION:

Given the findings, any regrets Treasurer, hand on heart, any regrets?

JOSH FRYDENBERG:

My focus is on the future. My focus is on delivering better consumer outcomes. It was the Coalition who yesterday announced that we are taking action on all 76 recommendations, and in some cases going further. I want to see the public’s trust in our financial institutions re-enforced and restored. That’s our goal.

QUESTION:

So, that’s not a no?

JOSH FRYDENBERG:

Our focus is on ensuring consumers get a better deal and that their trust in our financial institutions is restored.