MARK DREYFUS MP

Member for Isaacs

Melbourne Press Conference 26 February 2019

26 February 2019

SUBJECTS: Labor's $640 million Banking Fairness Fund; Labor's financial rights access to justice package; Banking Royal Commission; Labor's bank victim compensation package.

MARK DREYFUS QC MP
SHADOW ATTORNEY GENERAL
SHADOW MINISTER FOR NATIONAL SECURITY

CLARE O'NEIL MP
SHADOW MINISTER FOR FINANCIAL SERVICES

SHADOW MINISTER FOR JUSTICE
MEMBER FOR HOTHAM


E&OE TRANSCRIPT
MEDIA CONFERENCE
MELBOURNE
TUESDAY, 26 FEBRUARY 2019

SUBJECTS: Labor's $640 million Banking Fairness Fund; Labor's financial rights access to justice package; Banking Royal Commission; Labor's bank victim compensation package.

GERARD BRODY, CEO, CONSUMER ACTION LAW CENTRE: (interrupted at start) - Were very pleased with this announcement today about increased resourcing for both financial counselling and community legal centres who specialise in the disputes that people have with financial service providers, and to ensure that we get fairer outcomes for people. Commissioner Hayne in his report on the Banking Royal Commission talked about the need for equality of arms in dispute resolution, and I think that this announcement will help deliver that.

Without further ado, I'm going to hand over to Clare O'Neil and Mark Dreyfus. Clare -

CLARE O'NEIL, SHADOW MINISTER FOR FINANCIAL SERVICES: Well its fantastic to be here at the Consumer Action Law Centre and Gerard can I thank you for welcoming us here today. Its been fantastic to start the announcement today talking to some people who've been really badly affected by wrongdoing from our big banks. We've met Nicky and Mr Syed who have both had a horrible experience, where they were lent far too much money by a banking institution that frankly should have known better. What we find with the people who've been affected by bank misconduct is that the effect that this has on their life is pervasive, it lasts for a long time, indeed a lot of bank victims that I speak with end up with lifelong impacts because of the conflict that they've had with a financial institution.

Yesterday, Bill Shorten announced that Labor will create a Banking Fairness Fund. This is a $640 million fund that will pay for better services for people who are in conflict with a financial institution. Yesterday we announced that about half of that money is going to go to financial counselling.

This is a crucial service. It is often the last line between bankruptcy, between someone losing their house, between a woman who leaving her home who is in enormous financial distress. So we are going to double the number of financial counsellors in Australia, assisting an additional 120,000 Australians every year.

Today we are making the second big announcement of how the Banking Fairness Fund will be spent. We will commit $120 million over four years to assist with community legal centres like the one we are at now. What we want Australians to understand is that we get it that if you are in conflict with a banking institution you feel like you have no power. You feel like you are on your own. We are going to try to fix that.

We want people who are in conflict with the banks to have someone standing by their side.

The Banking Royal Commission gives us a once in a generation opportunity to balance financial services back in favour of the consumer, and Labor is going to take it. Mark

MARK DREYFUS QC, SHADOW ATTORNEY GENERAL: Thanks very much Clare, we know that there is a lot of unmet legal need in Australia. We know this from work done by the Productivity Commission reporting in 2015. We know it from work done by the Law Council of Australia over the last 18 months, their report called The Justice Project landed in August.

Both of those reports absolutely show that the unmet legal need in Australia is large, particularly, as Clare has just said, in this area of financial advice and access to skilled lawyers at community legal centres in the legal assistance sector, who can provide the weapons, if you like, to take on the banks. There is a tremendous disproportion of power between banks who have wronged consumers. Its time for consumers to have access to the legal advice that they need, and I'm very proud to stand here on behalf of Labor, with Clare O'Neil, to make this announcement today.

JOURNALIST: It seems like there's a lot of money being spent on putting out fires, I guess, would it also be effective to require banks to treat customers fairly to start with, would that be another way of approaching this problem?

O'NEIL: Were here after a Banking Royal Commission that has laid bare the appalling treatment of many Australians at the hands of the big banks. And if the big banks haven't taken away the message that their conduct needs to change, then we've got another problem on our hands. What I know is that Labor is genuinely committed to making a change in this area. We had a Government that voted 26 times against having a Royal Commission.

While Labor for 2 years was arguing for a Royal Commission, the Government was trying to give them a $17 billion tax cut. What we need is a Government in Canberra that recognises this power imbalance, changes the laws to make sure that people are treated more fairly, but there are always going to be people who slip through the cracks, and people who are vulnerable, who need the support of counsellors and lawyers. At the moment there is enormous unmet demand for these services. And we are going to make sure that when Australians have a conflict with a bank, they've got a lawyer and a financial counsellor by their side when they need it.

JOURNALIST: You've seen that the big banks have been very good at dealing with the regulators with ASIC and APRA forcing them into negotiated settlements and that sort of thing rather than really going to court. How do you see this announcement avoiding those sorts of similar problems where banks are able to game the system, game the regulators in an attempt to put pressure on them?

O'NEIL: I think its pretty clear that the relationship between ASIC and the banks has been to cosy in times past, and Commissioner Haynes report makes it absolutely clear that that needs to change. ASIC says they get that message, and I think we are going to see how they manage the referrals from the Royal Commission to see whether things really have changed there.

But whatever we do in Financial Services, we are going to run into issues from time to time. There are lots of vulnerable people in this country. Some of them get preyed on by the banks, by payday lenders, and others, the important thing is they need someone by their side when these conflicts occur. As I said, the Royal Commission has given us the chance to rebalance the power in financial services in favour of consumers, and that is what Labor is going to do.

JOURNALIST: The UK has a similar model to this with a levy, but some of that money is spent on financial literacy. Are you going to put some money towards financial literacy?

O'NEIL: Well look at other suggestions for funding. We do fund financial literacy as a federal government. I just want to caution people though about this idea that if consumers could just understand more, then we wouldn't run into these problems. The truth is there is a fundamental imbalance between the knowledge that big banks and financial sector companies have, and ordinary consumers, and you are never going to change that through a Government program. What we need are good laws, and plenty of lawyers and financial counsellors who can help people when they come into conflict with a bank.

JOURNALIST: Mr Dreyfus, there's been some disquiet around the compensation scheme policy announced last week, particularly around the possibility that a case that's been ruled on by the Supreme Court could be overturned by a panel that's appointed by the executive.

DREYFUS: I think that's an issue that we are going to have to work through in practice in future to ensure that judgments in court can sit in tandem with any compensation scheme. I don't myself see that there's going to be any difficulty.

JOURNALIST: Do you have any (interrupted) Sorry

O'NEIL: If I can just jump in, one of the aspects of Labor's compensation scheme is in the very very worst situations, we are going to try to allow people to have a second chance to have their case heard. Now, there are obviously constitutional issues with re-hearing a court case, and we cant do that without the consent of the financial service provider. In instances where we can show a manifest injustice has occurred, and we ask the financial service provider for us to be allowed to have another look at that case, that is the circumstance under which we would consider looking at a previous court action. It is not about going over every court action that's ever occurred, but in those very small circumstances where a manifest injustice has occurred.

JOURNALIST: Do you think the banks are going to just say okay, take another look at this case that we won?

O'NEIL: I have a lot of dealings with the banks as you can imagine in my role. I can say that there is commitment there to change the way they are dealing with some of these issues. I think that what has amounted to abuse of the law in some court cases in the past is a matter of concern to bank CEOs. And I do believe there will be instances, where, in some limited circumstances, the banks will allow us to look at areas where there has been a manifest injustice occur.

DREYFUS: Nothing further? Thanks very much.

ENDS