The government is set to try and ram through destructive changes to responsible lending rules. This axing will mean banks can go back to the bad days of over-lending to people who will never pay their loans back. We cannot go back to the bad days of equity theft where banks lent to people who couldn’t afford it just so the bank could later sell their house for a profit.
ASIC and AUSTRAC have been doing a good job in slapping fines on banks after the Royal Commission, racking up just over $2.2 billion in enforcement. Its proof that we need heavy fines for bank wrongdoing and that ASIC can do a very good job keeping banks in line.
The government’s proposed changes take away power from ASIC to do the job they have been doing very well. This can’t be allowed, and I won’t allow this government to use the cover of the pandemic to ram through cushy rule changes for their banking mates.
Transcript
Senator Roberts
[Senator Malcolm Roberts] Thank you. And thank you for attending today. Firstly, to ASIC, congratulations on your recent enforcement action against AMP for fees for no service, and charging fees to dead people. I hope that goes well. I know that’s a comment without a question, but I appreciate that. In your most recent ASIC Enforcement Actions Bulletin to December 2020, you list 11 actions still pending from the Hayne Royal Commission. With AMP now underway, is that now reduced to 10, and can we expect further enforcement actions for bad banking behaviour?
I haven’t got the statistics in front of me. Perhaps, Commissioner Armour, the…
I think, yeah Commissioner Hughes might be the best able to answer that.
Yeah, thanks. Thanks Cathie. Senator, good afternoon. We can take that one on notice. I think your assumption is probably correct because we have been netting down. If I can put it that way the number of matters as we’ve gone through. So if I’m going to make this point we had 13 matters referred to us by the Hayne Royal Commission. And we are, as I say, going through all of those matters, as well as 32 case studies that were examined by the Royal Commission, which we took on. But we will give you a specific answer on your question about it. I think you’re correct but I just want to be crystal clear on that.
[Senator Malcolm Roberts] Thank you. Do you have a dollar figure for the total cost to Australian ADI’s, that’s banks, for bad banking behaviour in the last five years as a result of asset enforcement action?
We don’t have a total cost of the behaviour Senator, what we would be able to provide to you on notice is the total amount of civil penalties and other regulatory outcomes that we’ve achieved over the period since the Royal commission.
[Senator Malcolm Roberts] That, that in fact Mr. Hughes, is what I’m asking for. So thank you. So
So Senator I might just add one other aspect to the cost measurement would be the remediation payments as well which we know collectively now are well above $10 billion.
[Senator Malcolm Roberts] Okay. Thank you. To confirm, you currently have 11 enforcement actions before the courts for credit misconduct. Is that correct?
That’s my understanding Senator.
[Senator Malcolm Roberts] And that’s for breaches of responsible lending laws?
Oh no. Sorry. I thought you meant, Senator, in relation to the matters arising from the Royal Commission. I didn’t hear you correctly.
[Senator Malcolm Roberts] No
Not it’s not physically in relation to credit.
[Senator Malcolm Roberts] It just happens to be the same number, 11 in both cases. This is for credit misconduct. I think you have a total of 11, and that’s before the courts?
I’m going to have to check those numbers. I’m sorry, Senator. I don’t have whatever it is whatever it is you’re referring to in front of me.
[Senator Malcolm Roberts] Okay, I have ASIC enforcement update July to December 2020, page seven. There’s a table there.
Can I take that on notice, Senator?
[Senator Malcolm Roberts] Sure. Thank you. I appreciate you valuing accuracy. Have you changed your enforcement since the Hayne Royal Commission?
I don’t believe that we would say we have changed our enforcement. What we have done is prioritised matters that give rise to significant consumer detriment or hardship or which relates to egregious misconduct including matters that might undermine confidence in the market. So there has been a refocus or a swinging of our prioritisation of matters, specifically to address those strategic enforcement priorities. We obviously receive a vast number of reports of misconduct, which my colleague Mr. Day could talk to you about, but Senator, we couldn’t possibly resource every single matter. So we, we put them through a process by which we identify those matters which meet our strategic priorities. And it would also prioritise enforcement matters that might relate to other priorities or thematic priorities such as misbehaviour in the OCC derivatives market those matters, or matters that involve predatory lending or misconduct involving indigenous or remote communities. So we have a number of filters, which we apply in deciding which matters to take to enforcement.
[Senator Malcolm Roberts] So it sounds like ASIC is doing its job and you’re policing responsible lending provisions, correct?
We’re enforcing the laws as they exist today, Senator. We’re very mindful, of course, as Senator McKim was asking me earlier that there are reforms before this chamber in relation to responsible lending. And we will be interested to see the passage of those reforms, if that is indeed what takes place. But where the law is settled then we will pursue those matters where we identify misconduct and there is an actionable bridge that we can pursue.
[Senator Malcolm Roberts] So in a briefing with Treasury, which didn’t involve me but my staff were involved. As were Senator Hanson’s staff, Treasury advised my staff that the reason for the decision to move Responsible Lending Regulation from ASIC to APRA was based in large part, apparently, on the actions of ASIC in tightening lending regulations. Have you tightened the legislation or regulation in respect of Responsible Lending since the Hayne Royal Commission? If so, how? I got the impression,
No
[Senator Malcolm Roberts] No, you haven’t?
No, Senator, ASIC does not have the power, the legislative basis or any legislative basis to change the law or regulations. Prior to the completion of the Royal Commission, ASIC updated its guidance response, its guidance number two zero nine, regulatory guide two zero nine, in December 2019, which provided further examples of the sorts of conduct and considerations that responsible lenders should take into account when making lending decisions. But as I said to Senator McKim, that guidance does not have the force of law, and we have not changed the rules or imposed any new obligations since the Hayne Royal Commission.
Thank you The only thing that has happened since the Hayne Royal commission Senator – sorry to cut you off is that the full federal court handed down its decision in the Westpac matter.
[Senator Malcolm Roberts] Thank you. Is it true to say that any tightening in bank lending practises is the decision of the banks, not of ASIC?
Well, we don’t make decisions on individual loan applications, Senator. Those are entirely matters for the banks. They will have regard obviously to Prudential Standards, administered by APRA. They will have regard to their obligations under the Consumer Credit Act administered by ASIC. And they’ll also have regard to the decisions of courts and of APRA. But the decision to advance a line to any particular borrower, consumer or business is entirely that of the bank, not its regulators.
[Senator Malcolm Roberts] Minister, could you agree that it would be possible for some people to categorise the stripping of Responsible Lending Regulation from ASIC to be a penalty for your enforcement act, for its enforcement action against the banks?
No, I think that’s an unfair characterisation, Senator Roberts.
[Senator Malcolm Roberts] I just want to go on record saying I appreciate the directness and the quality of the responses from ASIC. So thank you very much.
Thank you, Senator Roberts.
