FINANCIAL RIP-OFFS INQUIRY RECEIVES OVER 1300 CONTRIBUTIONS

The Senate Economics References Committee has just published a significant number of contributions made to the Senate Inquiry into Consumer Protections in the Banking, Insurance and Financial Sector.

Consumer group CHOICE sought input from the public about their views on and experiences of rip-offs, dodgy practices and unfair treatment in the sector, and received over 1300 responses, including over 700 public responses. These responses are in addition to the 60 comprehensive submissions that have been published on the inquiry website to date.

“This overwhelming response shows just how deep community concern runs with culture and practices in the sector,” Senator Gallagher said.

“This inquiry is allowing those who have been ripped off and unfairly treated to put their stories on the record,” Senator Ketter said.

The inquiry is examining the impact of misconduct in the banking, insurance and financial services sector on victims and on consumers, including small businesses, providing them with the opportunity to put their experiences and views before the committee.

“The Prime Minister has consistently failed to stand up for the victims of financial misconduct in this country, preferring instead to protect his banking friends,” Senator Ketter said.

“In the absence of a royal commission this inquiry provides an important platform for consideration of further consumer protection measures needed. However, Labor will continue to fight for a royal commission because it’s the only thing that can get to the bottom of systemic and cultural issues in the banking and financial services sector,” Senator Gallagher concluded.  

The submissions including the CHOICE contributions (collated in submission 59) can be viewed on the inquiry’s website here.

THURSDAY, 20 APRIL 2017

1 reaction Share

TURNBULL GOVERNMENT’S WEDGE ON THE PUBLIC SERVICE WIDENS

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

1 reaction Share

BANKS’ STAFF PAY REVIEW FALLS SHORT

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

1 reaction Share

BANKS PUT ASIC UNDER ‘INTENSE PRESSURE’

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.   

WEDNESDAY 19 APRIL 2017

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

 

Add your reaction Share

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

1 reaction Share

AUSSIES RETIREMENT SAVINGS ARE TOO IMPORTANT TO BECOME NEXT VICTIM OF TURNBULL GOVERNMENTS DIVISION AND DYSFUNCTION

We are just one month out from the 2017-18 Federal Budget and the deep divisions within the Turnbull Government’s economic team are on full public display as they argue over whether or not to raid superannuation savings to help address housing affordability.

Malcolm Turnbull’s weak leadership is on full display and he should come out today and rule out this “thoroughly bad idea” of a policy once and for all.

This policy proposal has been widely condemned by a wide range of experts and even senior members of the Turnbull cabinet including Mathias Cormann, who all seem to understand that using superannuation savings to help young people buy a house will do nothing other than erode the retirement savings of younger Australians and push up house prices at the same time.

The retirements savings of Australians are too important to have become a source of internal division within the Turnbull Government.

This crazy idea should have been ruled out by the Prime Minister weeks ago but instead his Treasurer has been running his own show and actively out spruiking the policy idea.

As this public brawl drags on we now have a conga line of Government members giving their free advice to the Prime Minister.

Those against using super for housing:

MATHIAS CORMANN
CHRISTOPHER PYNE
ANNE RUSTON
ANDREW BROAD
SUSSAN LEY
KELLY O’DWYER

Those in favour of using super for housing:

SCOTT MORRISON
MATT CANAVAN
TONY ABBOTT
MICHAEL SUKKAR
TONY PASIN
IAN GOODENOUGH
ZED SESELJA
ANGUS TAYLOR

It's well beyond time for the Prime Minister to stand up to the Abbott conservatives within his ranks and put the retirement savings of young Australians ahead of his own internal turmoil.

We can't allow super savings to be the next policy to fall victim to the Coalition's inability to stop tearing themselves apart - they've done it on marriage equality, climate change, 18c and now it looks like super will join the list.

THURSDAY, 13 APRIL 2017

Add your reaction Share

LABOR WELCOMES SMALL BUSINESS PAYMENT TIMES REPORT

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. 

1 reaction Share

ABBOTT V TURNBULL: RAIDING SUPER FOR HOUSING DEPOSITS

ABBOTT V TURNBULL: RAIDING SUPER FOR HOUSING DEPOSITS

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

1 reaction Share

CREDIT CARD CUSTOMERS THE LOSERS IN BANKS RESPONSE TO CODE REVIEW

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

1 reaction Share

ONE YEAR OF INACTION NOT GOOD ENOUGH

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

1 reaction Share