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    Today’s news on the Turnbull Government’s decentralisation program goes to show that the blatant and shameless pork barrel that is the APVMA relocation is just the thin edge of the wedge.

    It is either the beginning of one of the saddest chapters in Australian government history or it’s a pathetic attempt to cloak the disaster of the proposed relocation of the APVMA in a decentralisation policy. 

    How long has the Turnbull Government been hatching this plan. 

    And what is Zed Seselja doing to protect Canberra against this latest move in what has been a sustained attack on our nation’s capital by successive Liberal Governments?

    Six out of ten federal public servants already work outside Canberra.

    From June 2013 to December 2016, the Liberals have cut nearly 13,000 public service jobs. This means about one in 13 public servants have lost their jobs.

    This latest attack just shows the Turnbull Government’s complete contempt and disdain for the nation’s capital.

    We saw it in 1996 under the Howard Government, when 15,000 public service jobs were axed, sending Canberra into an economic slump for five years.

    Sir Robert Menzies would be turning in his grave. The Turnbull Government is doing its level best to destroy the legacy of the founder of the modern Liberal Party.

    And how much will this cost? And at what cost?

    This plan will decimate Canberra.

    WEDNESDAY, 19 APRIL 2017

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    Labor notes today’s release of the Sedgwick Review of Retail Bank Remuneration and welcomes the Australian Bankers’ Association’s response that the banks will implement the review’s recommendations in full.

    Implementation of these recommendations may assist with improving customer outcomes. 

    While this review and the ABA’s response are steps in the right direction, we note that only one page of the 59 page report focusses on senior executive pay and bonuses.

    The review’s terms of reference focussed on pay arrangements for lower level retail banking jobs and meant the reviewer was unable to scrutinise middle and senior executive pay and bonuses, which can have a critical impact on bank culture. As Mr Sedgwick said, “[t]ime did not permit (and the Terms of Reference did not require) comprehensive data gathering about the remuneration arrangements of those more senior than the immediate managers of in-scope retail bank staff.” (page 27)

    Despite the banks’ promises to ‘increase transparency and accountability’, many of the submissions banks made to the review are not public. There remains a real lack of customer knowledge about the way banks pay their staff.  

    Only a Royal Commission can provide the systematic, thorough and transparent investigation that’s needed to stop the rip-offs, poor practices and unfair treatment of customers, and get to the bottom of systemic and cultural issues in the banking and financial services sector.

    WEDNESDAY, 19 APRIL 2016

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    The report in The Australian today about the big banks putting intense pressure on ASIC to amend the regulator’s draft media releases is very concerning.

    It is vital for Australian consumers that ASIC has the ability to do its work as a regulator independently – and not be beholden to or pressured by the banks.

    A strong and independent regulator is a critical part of Australia's financial system.

    ASIC's independence should not be compromised in any way, particularly by the institutions it is there to regulate.

    Today’s report is further evidence of a need for a Royal Commission to get to the heart of the cultural issues and problems in the banking and financial sector.   


    Senator Katy Gallagher is Labor's Shadow Minister for Small Business and Financial Services. 


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    Op Ed: Banks have abused credit card holders for too long. Let's end it

    The Reserve Bank's latest quarterly snapshot of how Australians spend marked a milestone. For the first time, the number of credit and debit card payments eclipsed the use of cash on transactions under $10,000.

    Given this trend and the fact that there are almost 17 million credit card accounts active in Australia today, it's clear why this is an increasingly profitable space for banks. You would think our banks and the government would have fairness for these card holders near the top of their priorities. Think again.

    The Australian Bankers' Association recently dropped its response to the review of the banking code of practice: what the association calls its "customer charter". By title, the response might seem dull but, in reality, it could have large ramifications for your hip pocket.

    The review was one of the six promises banks made in April last year to "strengthen community trust" and "protect consumer interests" – and to fend off Labor's call for a royal commission into the sector.

    The banks appointed respected governance adviser Phil Khoury to look at their customer charter and, after seven months of hard work, he came up with 99 recommendations, which the association has now responded to.

    If you only read the association's media release, you would think its response was the panacea to all the banks' problems. But the devil is in the detail. On credit cards, the banks refused to commit to some of the most important changes that could save you money.

    The most glaring example is how banks calculate credit card interest charges, which seems complicated by design.

    Australians pay a whopping $5.5 billion in these interest payments a year and, while it is reasonable to expect that late payments would attract a penalty, banks use several tactics that often mean you lose out while they rake in the cash.

    Most Australians expect that, if you spend $1000 on your credit card for the billing period, and you pay back $800 by the due date, you should only need to pay interest on the $200. That seems reasonable, because that's the amount that's overdue. But often that's not what happens. What many customers don't know is that, when they don't repay the full amount on time, many banks charge interest on the whole $1000, even though the $800 was paid on time.

    Banks even backdate interest to the dates of the original transactions, instead of charging interest from the due date. With credit card interest rates as high as they are, this can eventually add up to huge amounts.

    Consumer group Choice says the ways banks calculate credit card interest is "mind-bending". The banks' own reviewer found "few customers would be aware that this was happening at all". Khoury said charging interest on purchases that were fully paid off on time "must be prohibited" and told the banks the practice was "unacceptable", "substantively unfair", and would be seen as "just plain tricky". It's hard to think of stronger criticisms, but the banks ignored him.

    The banks also want to continue making unsolicited offers to increase credit card limits. You may be quite happy with your current credit limit but that doesn't stop banks from offering an increase out of the blue, with a slick marketing pitch and often to a level that makes you think "wow, that's a lot of zeros".

    There's a gap in the law that allows banks to send these offers as long as you've clicked a box when you first apply for your credit card. The banks' reviewer agreed it would show more respect to customers to make credit card limits less about marketing and more about what the customer decides to ask for. If customers decide they want to be able to borrow more on their card, they can always go to the bank and ask for an increase.

    Finally, banks make it very easy to apply for credit cards online, but they're often harder to cancel. This means that, if you see a card that's a better deal, it's an effort to move over, or you end up hanging on to your old card, too. Meanwhile, as long as you still have the old card, you can continue to accrue steep annual fees, sometimes hundreds of dollars.

    Although the banks said they supported making it easier to cancel cards, and some banks said they'll act, the banks' association refuses to clearly commit its members to simple, online cancellation of credit cards. The arguments for allowing online cancellation are pretty straightforward. In 2017, why should you need to go into a branch or call up and suffer through the hard sell?

    The banks' failure to make these three changes, which would anyone with one of their credit cards, is a missed opportunity. But these issues aren't new. We've known about a lack of competition and consumer protections with credit cards since at least December 2015, when a Labor-led Senate inquiry recommended a clean-up.

    Then, almost a year ago, the government finally accepted that change must happen and said it would table draft legislation "in the near term" that outlawed tricky interest charges, banned unsolicited credit increase offers and required banks to allow for online cancellation. Since then, we've seen nothing from Malcolm Turnbull or his minister.

    Given banks have decided not to act on these important changes, the government must now take responsibility, deliver on its promises and protect Australians from unfair fees and charges. Credit card fees and charges have been very lucrative for the banks. It's well past time this highly profitable industry gave credit card customers a fair go.

    Katy Gallagher is the federal shadow minister for small business and financial services and a senator for the ACT.

    This opinion piece originally appeared in the Fairfax newspapers on 17/04/2017

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    Labor welcomes the report from the Small Business and Family Enterprise Ombudsman into payment times and practices for small business, released today.

    Cash flow is crucial to the success of any small business and waiting for payment for supplies or services delivered months ago is a massive issue for small businesses right across Australia and it's one that is constantly raised with me when I talk with small business owners.

    When it comes to paying bills on time the Turnbull Government should be setting the standard and leading the way but unfortunately just last week the ‘Government pay on-time Survey’ revealed that the Government has paid more than $450,000 of taxpayer money in late payment interest penalties to small businesses over the past two years.

    It simply isn't fair that small businesses with tight margins are held to the mercy of big business that can take up to three months to pay their bills.               

    Labor will look closely at the ASBFEO's reports recommendations and we thank all of the businesses who took the time to participate in this inquiry on such an important issue for small business in Australia. 

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    Tony Abbott has come out strongly in support of a proposal to allow early access to superannuation for a housing deposit, calling it “a good idea”.

    Malcolm Turnbull in 2015 called the same proposal “a thoroughly bad idea”.

    So hopefully the Australian people never hear any more about of this crazy proposal again.

    This is one crazy idea that the Prime Minister actually needs to hold the line on and not cave into populist pressure from Tony Abbott and out-of-touch Coalition backbenchers.

    Saul Eslake on ABC730 put it most simply and eloquently last night on this proposal:

    “I think this is a very bad idea. The reality is that anything that allows first home buyers to pay more than they otherwise would without those schemes, for the property they buy, results primarily in more expensive properties rather than an increased proportion of people owning their own home.”

    This crazy idea has more traction within the Liberal Party this year o because the Government has tied itself up in political knots on negative gearing, to the point it can no longer act, and so is left pursuing really bad public policy ideas.

    Such policy ideas will do nothing other than bid up house prices making affordability worse and undermining the retirement savings of young people.

    Note: As this media release is distributed, fresh reports are suggesting this proposal has been killed off in the latest example of the Treasurer’s shambolic approach to public policy.

    TUESDAY, 11 APRIL 2017

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    The Australian Bankers Association’s (ABA) rejection of key recommendations of the Khoury review to stop 'tricky' interest charging and commit to online cancellation of credit cards will hurt banking customers and demonstrates the urgent need for the Turnbull Government to bring forward legislation that will protect credit card customers from these unfair practices.

    In his review, Mr Khoury said that charging interest on a portion of a credit card balance that has been paid on time is “unacceptable and must be prohibited. It is substantively unfair in applying interest and (if understood) would be perceived by customers as just plain ‘tricky’” (page 83, Independent Review - Code of Banking Practice).

    The banks have responded to this by stating "the industry does not support the Code prescribing how interest is charged” (response to recommendation 23(a)).

    Other recommendations of the independent review rejected or not agreed to in full  by the ABA includes a clear recommendation to allow simple online cancellation of credit cards and calls to stop unsolicited offers to increase one’s credit card limit.

    Almost a year ago Malcolm Turnbull promised to act on credit card reform, including these three recommendations but has not been able to deliver these much needed reforms.

    For way too long banking customers have been ripped off when it comes to credit cards. Hidden charging, high interest rates, high annual fees, expensive rewards programs, exorbitant late payment fees and inappropriate lending practices have resulted in customers being slugged unfairly whilst the banks make millions in credit card profits.

    The half-hearted response from the ABA today places the ball squarely in Malcolm Turnbull’s court.

    Inaction on credit card reform is no longer an option from this weak Prime Minister.

    TUESDAY, 28 MARCH 2017

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    Calls for urgent action by consumer advocates today are a reminder that Malcolm Turnbull and his Government continue to let-down Australians who are being preyed upon by short term credit lenders.

    In the year since the Turnbull Government received a report urging action to reform small amount credit contracts the Prime Minister has failed to respond and protect vulnerable consumers being ripped off.

    Labor believes that ensuring proper regulation of small amount credit contracts and consumer leases and protecting consumers from predatory lending behaviour should be worthy of the urgent attention of this Government.

    Labor, when in government, enacted the National Consumer Credit Protection Act 2009 which implemented a national regime for the regulation of consumer credit for the first time. In 2012, Labor made further enhancements to this regime, including additional protections regarding small amount credit contracts and consumer leases, in response to growing concerns about improper behaviour by payday lenders.

    In the recent Senate Estimates it was revealed that small amount credit contract reforms were not even on the legislative drafting program.

    Senator Gallagher: And it hasn’t started for those - the drafting hasn’t started for those: credit cards and small amount credit contracts?

    Treasury Official: We’re not currently drafting that legislation, no. – Senate Estimates, Wednesday March 1, 2017.

    Inaction is not an option on this important area of consumer protection.

    Labor joins with consumer advocacy organisations today to call on the Turnbull Government to step up and protect vulnerable Australians from predatory lending practices as a matter of priority.

    MONDAY, 27 MARCH 2017

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    The corporate watchdog has released yet another scathing report into the big financial advice firms, finding that they have not done enough to report misbehaviour by their financial advisers.

    Only one week ago the CEOs of the big four banks lined up in Canberra to reassure community that the banks were changing their ways, however, the ASIC report paints a very different picture.                    

    Key findings of the report released today include:

    • Failure to notify ASIC about serious non-compliance concerns regarding adviser conduct;
    • Significant delays between the institution first becoming aware of the misconduct and reporting it to ASIC;
    • Inadequate background and reference-checking processes; and
    • Inadequate audit processes to assess whether the advice complied with the "best interest" duty and other obligations.

    ASIC also noted:

    “…many of the institutions we reviewed did not ensure that their internal processes consistently supported the value of ‘doing what is right’ for the customer. Many of the failings we identified led, or had the potential to lead, to poor outcomes for customers.” – Financial advice: Review of how large institutions oversee their advisers, page 15.

    Dodgy financial advice and poor professional conduct have been at the centre of many of the financial scandals in Australia so it staggering to learn that despite warnings over many years, the big firms are dragging the chain in reporting to the regulator or improving processes within their own organisations. 

    How much longer and how many reports will it take before Malcolm Turnbull stops protecting the banks and instead stands up for banking customers? 

    Labor will continue to fight for a royal commission because we know it is the only way to shine a light on the misconduct and cultural issues in the banks that have led to thousands of Australians, including small businesses, being ripped off or treated unfairly by them.

    FRIDAY, 17 MARCH 2017

    Senator Katy Gallagher is Labor's Shadow Minister for Small Business and Financial Services.

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    Labor calls for high-calibre talent on new standards body

    This will be another important year for the financial advice sector, which faces the serious work of implementing the reforms passed earlier this year. In some ways, passing the laws was the easy bit. Making sure the new arrangements work for the profession will be just as important.

    Labor supported recent legislation to strengthen professional standards for financial advisers because we believe it will strengthen the profession, address some of the shortcomings in the quality of financial advice that has plagued the sector in recent times and weed out the poor and shonky operators. This has certainly been the experience when similar bodies have been established across other professional groups.

    Under the new law, financial advisers will be required to hold a degree or equivalent qualification, undertake a professional year, pass an exam, undertake continuous professional development and comply with a code of ethics. There is an obligation on the Australian Financial Services licensee to ensure that advisers comply with the new education standards and are covered by a compliance scheme. The legislation protects the use of the terms ‘financial adviser’ and ‘financial planner’, in recognition of the unique skill set that providing financial advice requires.

    The reforms include the recognition of a new standard-setting body that will detail the new education standards and develop a code of ethics for financial advisers. Labor will be watching the appointees to the board of the new standards body closely. This board will have a great deal of responsibility in setting the new degree requirements that financial advisers have to meet. Labor expects people of a high calibre with significant experience to be appointed to the board, to ensure that these new standards are set at a robust level.

    I was pleased to see the support across industry and consumer groups for this legislation. These reforms have been a long time coming. It was back in May 2014 that the Financial Planning Association (FPA) released a white paper that put forward a plan to prepare the profession for higher professional standards. And it was in September 2014 that the Financial Services Council called for an independent body to have control of education and professional standards for financial advisers.

    With the financial services industry firmly in the political and public spotlight, the challenge before the profession in building and maintaining public confidence is not insignificant and I am hopeful that these laws, supported by all sides of politics and the financial planning industry, will assist with meeting that challenge.

    Keen to engage with sector

    As the financial planning industry adapts to the changes to professionalise the industry and the financial costs that come with that, Labor is keen to engage with the sector on ways to ensure that personal financial advice is something that remains accessible and affordable for people. This is especially relevant for women and those on lower incomes, who we already know experience financial exclusion to a much greater degree than others and are arguably more in need of the specialist advice that financial planners can provide.

    Since taking on the shadow minister for small business and financial services role, I have learnt a great deal about this incredibly important industry. I would like to thank everyone who has invested time and energy in bringing me up to speed on the major issues. In such a complex, changing and politically charged policy space, the expertise and advice that advisers and the FPA have given me in my first few months in the role has been invaluable.

    I look forward to strengthening the relationship with financial advisers and their representative bodies in 2017.

    This article first appeared in Professional Planner on March 16, 2017.

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