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.


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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.


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

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The Government’s latest thought bubble of super savings for housing has been labelled “crazy”, a “thoroughly bad idea” and now, new research shows it will cost the Budget over the long-term.

Rice Warner research shows that for a 35 year old on average earnings using $100,000 in super savings for a housing deposit, would cost the taxpayer an additional $92,000 in Age Pension payments in the future.

It’s yet another reminder that the Government will come up with any crazy idea to avoid having to do the hard work on housing affordability by reforming negative gearing and the capital gains tax discount.

And we know that the Coalition will continue to do everything in its power to undermine Australia’s retirement income system and compulsory super system in particular.

This latest re-run on a proposal scrapped by Joe Hockey creates new financial risks, undermines the compound saving of superannuation, and does nothing more that bid up house prices and make housing more unaffordable.

The Turnbull Government is deeply divided over this latest thought bubble.

Malcolm Turnbull once called it a “thoroughly bad idea” but now seems to have taken ownership of it from the Liberal Party backbench.

Mathias Cormann confirmed on RN Drive last night that he remains deeply opposed to the idea he once said would “reduce housing affordability, including for first home buyers”.

No wonder confidence in the housing market is at 40 year lows.

And these figures come after repeated warnings from the RBA, APRA, the Government’s own Financial Systems Inquiry, and the OECD, about the risks in the housing market.

These are risks that not only threaten housing affordability for young home buyers but they threaten the economic and financial stability in the Australian economy.

This latest Government proposal would just encourage first home buyers to use their own super to bid against investors who would continue to have access to the most generous property tax concessions in the world.

That isn’t a plan; it’s a sham and would just increase house prices.  


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

This is a joint release with Labor's Shadow Treasurer Chris Bowen MP. 

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An RBA survey, released today, shows that the number of credit and debit card payments have eclipsed the use of cash and is a stark reminder to Malcolm Turnbull that he can no longer continue to ignore the need to boost consumer protections on credit cards.

Almost 12 months ago Malcolm Turnbull promised to reform credit card laws but to-date nothing has happened.

Treasury even confirmed in the recent Senate Estimates that these reforms were not on the Government’s legislation priority list.

With more Australians signing up for credit cards and using credit or debit cards as their most common form of payment method on spending less than $10,000, its essential that the appropriate protections are in place to ensure Australians aren’t getting ripped off.

Banking customers have been paying the price for credit cards with hidden fees and charges, high interest rates, expensive reward programs and late payment fees for way too long. With Australians paying a whopping $5.5 billion each year in annual interest costs alone it’s time for the Prime Minister to deliver on these much needed reforms. 

Labor is supportive of these reforms and urges the Government to prioritise credit card reform legislation and bring it to the Parliament as soon as possible.


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

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Shadow Minister for Small Business and Financial Services Katy Gallagher and Shadow Consumer Affairs Minister Tim Hammond MP have backed-in calls from the ACCC and ASIC for insurance companies to do better when it came to the sale of add-on insurance sold by car dealerships.

Labor’s calls come in response to yesterday’s announcement from the ACCC that insurance companies’ proposal to limit commissions on add-on insurance was anti-competitive and would not solve the anti-consumer problems in the current market.

The insurance companies’ proposal came off the back of concerns raised in a number ASIC reports about the treatment of consumers by insurance companies when selling ‘add on’ insurance during the motor vehicle sales and finance processes.

ASIC identified a number of commonplace practices in which consumers are being sold products that are poorly designed, bad value for money, and in many cases inappropriate for consumers. ASIC’s findings included:

-          Car dealers earnt $602 million in commissions, whereas consumers only received $144 million in successful insurance claims

-          Commissions to car dealers were as high as 79 per cent of the value of the premium

-          Premiums are often packaged up into one single premium payment, added to the cost of finance. This led to research showing that most consumers of add-on insurance were not even aware they were covered. Premiums were often not refunded if finance contracts were concluded early

-          Some policies were sold wherein it is impossible for the consumer to receive a claim payout that is greater than the cost of the premium

-          Some policies were sold to consumers who were never eligible to make a claim under the policy

-          Motor vehicle consumers are principally interested in the purchase and financing of their new vehicle, and so are not usually in a position to properly assess the details of multiple complex insurance policies. The high-pressure environment of car sales also inhibits good decision making.

“The evidence given in last week’s Senate Estimates hearings show that there is more to do than simply cap commissions. Insurance companies aren’t doing themselves any favours by trying to make the minimum-possible change,” Senator Gallagher said 

“Labor stands ready, willing and able to work with ASIC, the ACCC, the Government and insurance companies themselves to deliver better outcomes for consumers of add-on insurance products,” she said

‘ASIC has called on insurers to reduce commissions paid to those who sell add-on insurance, and the ACCC’s ruling does not prevent individual insurance companies from unilaterally lifting their game,’ Mr Hammond said.

‘ASIC has also called on insurance companies to improve the design, targeting and value-for-money of their add-on products, move away from single upfront premiums, and provide refunds to consumers who were sold insurance policies in circumstances that were unfair.

The ACCC’s media release can be found here:

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The last three days of bank CEO committee hearings have been another exercise in diversion from the real problems facing bank customers and have proven beyond doubt that only a Royal Commission into the sector will provide the scrutiny and accountability that's needed. 

The hearings saw CEO after CEO appear before the committee and refuse to answer direct questions, release important reports or take genuine responsibility for the failings of their banks. 

Whilst many questions were left unanswered, the hearings did establish the following: 

  • NAB CEO Andrew Thorburn, revealed that 1,138 employees had been disciplined for breaches of their code of practice;

  • The CBA boss, Ian Narev, reminded us that 40,000 customers had been charged for financial advice that never actually received the advice;

  • The CBA also admitted that no executives had lost their jobs over the CommInsure scandal, the rate rigging investigation or the financial advice scandal;

  • NAB and CBA brushed off reports of former staff saying that they had been subjected to intense pressure to push unsuitable products on customers;  
  • All CEOs refused to make public the number of executives earning above $1 million;
  • Westpac doesn’t allow customers the option to cancel credit cards online so that they can ‘have a conversation’ with customers and no doubt convince them to keep cards or sell new products; and

  • The Australian Bankers’ Association refused to disclose how much the banks are spending on their slick advertising campaign, but admitted that Labor’s calls for a Royal Commission had “galvanised” the sector to make reforms.

Bringing the banks to Canberra for a three hour chat is completely inadequate and is merely a diversion from the real issues facing banking customers.

Malcolm Turnbull should stop protecting the banks and establish a Royal Commission now. 

Labor will continue to fight for a Royal Commission because only a Royal Commission will provide the scrutiny that's needed to get to the bottom of poor banking culture and provide independent recommendations to restore confidence in the banking sector.


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

This is a joint release with Matt Thistletwaite, Labor's Shadow Assistant Minister for Treasury.

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Ongoing scandal and systemic issues within Australia’s big banks have reconfirmed the dire need for a Banking Royal Commission.

Fronting the House Economics Committee banking inquiry on Friday, National Australia Bank (NAB) chief executive Andrew Thorburn confirmed mistakes had been made and that bankers “sometimes don’t get [it] right”.

Today’s testimony coupled with a seemingly endless supply of questionable conduct proved nothing has changed and it’s business as usual for the big banks.

What we have witnessed today is the fine art of ducking and weaving by the NAB chief executive who shared little information about the cultural issues in his bank and answered direct questions with long-winded and unrelated answers.

Committee members asked direct questions, expecting direct answers but all that was provided in response was waffle and attempts to convince customers that all is well with the bank’s culture.

It’s concerning that NAB has owned up to the fact that 1,138 employees or almost 3 per cent of its total workforce has faced disciplinary action for breaches of the code of conduct with five senior executives facing action and two being dismissed.

It appears that the big banks are either unable or unwilling to stop their shonky behaviour. These bankers are not living in the real world.

Time and time again it appears the only way to ensure the banks are acting ethically is to expose their behaviour in the media. This is not a sign of good banking culture.

Labor will continue to fight for a Banking Royal Commission because we know that it is the only thing that can deliver the systematic, structural and cultural change that the banking and financial services sector needs.


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

This is a joint release with Matt Thistletwaite, Labor's Shadow Assistant Minister for Treasury.


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What will it take to for the Prime Minister to accept there needs to be a Royal Commission into Australia's banking system?

Below is just a sample of the cases over the last 12 months where poor practice, unprofessional conduct, illegal activity, overcharging and failures in consumer protections has been identified within Australia's big banks.

    • 14 Jan 2016: ASIC banned former ANZ bank adviser for ten years for misleading and deceptive conduct
    • 20 January 2016: Westpac paid $1 million after ASIC raised concerns about bad credit limit practices
    • 4 February 2016: ASIC banned former NAB bank adviser for seven years for amending change of adviser forms without the knowledge of the client
    • 7 March 2016: ANZ paid $212,500 penalty for breaching responsible lending laws when offering overdrafts
    • 7 March 2016: Allegations surfaced of a case where CommInsure abruptly stopped income protection payments to a customer and only began paying them again when media inquired.
    • 5 April 2016: Westpac subsidiary paid penalties of $493,000 after breaching consumer protections
    • 8 June 2016: ASIC banned former ANZ financial adviser for being under qualified to deliver financial services
    • 2 September 2016: CommSec paid $700,000 in infringement notice penalties and refunds $1.1 million in brokerage
    • 5 September 2016: ANZ to refund nearly $29 million to more than 390,000 accounts as a result of unclear fee disclosures
    • 8 September 2016: Westpac refunded $20 million in credit card foreign transaction fees, as ASIC warns consumers on foreign transaction fees for Australian dollar transactions
    • 27 October 2016: ASIC report Financial Advice: Fees for no service revealed 200,000 people were charged for financial advice they never received with ASIC estimating that $178 million could be paid in compensation
    • 28 November 2016: ASIC banned former Westpac financial planner for eight years with a customer remediation process recovering $1.12 million across 29 former clients.
    • 13 September 2016: Westpac refunded $9.2 million after failing to waive bank account fees for eligible customers
    • 14 December 2016: The Federal Court ordered fines of $9 million for ANZ Bank and $6 million for Macquarie Group over "very serious" attempts by traders to rig a key benchmark rate in Malaysia's foreign exchange markets.
    • 21 December 2016: CBA and NAB made a collective $5 million in payments for their conduct in wholesale spot foreign exchange businesses
    • 6 February 2017: National Australia Bank's wealth arm was forced to pay $36.5 million in compensation to its customers, after wrongly charging fees to superannuation fund members and wrongly denying insurance claims
    • 3 February 2017: Small Business and Family Enterprise Ombudsman Kate Carnell finds that the big banks have been unfair in their dealings with small businesses on loans. 

How many more Australians have to become victims of banking misconduct before this Prime Minister will act?

In the interests of all Australians Malcolm Turnbull cannot keep ignoring his responsibility as Prime Minister - it’s time for him to stop protecting his banking friends and establish a Royal Commission now.


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Kelly O’Dwyer has been left red-faced by the Treasury who directly contradicted comments where she claimed the Government was ‘drafting legislation as we speak’ to clamp down on dodgy payday lending practices.

In a media interview on Tuesday night the Minister assured the Australian community that the Government was prioritising reforms for pay day lending with legislation to progress them at the drafting stage.

Jeremy Fernandez: So why the delay now in enforcing it through legislation?

Kelly O’Dwyer: Well, there is no delay, the legislation is being drafted as we speak - Lateline, February 28, 2017.

But today in Estimates questioning a senior Treasury official said:

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.

The Minister’s public comments are clearly incorrect and she should immediately correct the record.

Kelly O’Dwyer can’t just make-up false claims to cover up the fact that her government is failing to protect consumers when it comes to predatory lending.


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

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The release of the CBA's CommInsure report demonstrates very clearly that Malcolm Turnbull’s protection of the banks and his failure to call a royal commission into the banks is allowing the CBA to brush-off the scandal with a "nothing to see here" report.  

The new report was commissioned and paid for by the Commonwealth Bank into its own scandal plagued insurance arm, CommInsure. Publishing a report without interviewing a single customer is simply inadequate and offensive to the victims of this scandal. 

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. 

Malcolm Turnbull needs to stop protecting the banks and do what is in the interests of Australian banking consumers and establish a royal commission.


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

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