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  • Turnbull's letter to Shorten: dump bank royal commission
  • By Fleur Anderson and James Eyers
  • 26/08/2016 Make a Comment
  • Contributed by: Johnsie ( 7 articles in 2016 )
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Prime Minister Malcolm Turnbull has written directly to Bill Shorten asking him to abandon Labor's banking Royal Commission and instead focus on more immediate measures to hold bank chiefs to account and deliver justice to aggrieved bank customers.

As Treasurer Scott Morrison confirmed on Thursday the government was working on a "level playing field" tribunal to give bank customers a legal forum to have their complaints heard, Mr Turnbull appealed directly to Mr Shorten to remind him of the cost and delay of a Royal Commission when more practical measures, like an overhaul of the financial system's dispute resolution schemes and annual parliamentary hearings of bank chiefs, were more effective.

And the Turnbull government has now elevated a previously low-key finance industry review as its biggest defensive weapon against Labor's banking Royal Commission attack.

"I have two practical proposals for you to consider," Mr Turnbull wrote to Mr Shorten.

He asked Mr Shorten to appoint some of Labor's "keenest minds" to a parliamentary committee that would grill the heads of the major banks on an annual basis in order to improve the sector's accountability and restore public confidence.

The second proposal was to discuss with Mr Turnbull's senior ministers any additional measures Mr Shorten – a former Superannuation and Financial Services Minister – believed would be most valuable in protecting consumers.

"Given your long experience in the financial services portfolio I am sure you have more immediate and practical proposals for reform than simply calling for an inquiry," Mr Turnbull wrote.

Forcing debate

Labor is determined to test Mr Turnbull's thin majority as early as next week by forcing a parliamentary debate on a banking Royal Commission which the Opposition believes could tempt some Coalition MPs and senators to cross the floor.

However, that possibility is looking more remote after Mr Morrison said the government's key adviser on a banking tribunal would consider the legally binding model pushed by LNP senator John "Wacka" Williams, Liberal SA Senator David Fawcett and LNP MPs Warren Entsch and Bert Van Manen.

The Ramsay review – previously known as a review of "external dispute resolution and complaints framework" when it was announced by Financial Services Minister Kelly O'Dwyer in May – is chaired by Melbourne University professor and corporate law expert Ian Ramsay, and comprises consumer representative Choice chief executive Alan Kirkland and Productivity Commission commissioner Julie Abramson.

But Mr Morrison upped the review's firepower on Thursday by confirming it would recommend to the government the model for introducing a banking tribunal, and not just a review of existing bodies: the Financial Ombudsman Scheme, the Superannuation Complaints Tribunal and the Credit & Investments Ombudsman.

It would also consider changes to lending practices to farmers, as advocated strongly by Nationals and rural Liberals MPs .

"I agree with those in the banking sector who have said they believe the key to making this cultural shift is to restore banking as a profession," Mr Morrison told a Bloomberg event in Sydney.

"A professional banker should serve their clients like a doctor cares for their patients."

Political pressure

An issues paper will be released within weeks.

Mr Turnbull has also added to the political pressure on Mr Shorten, telling him the government's review would produce an interim report in November this year and a final report by March 2017.

A Royal Commission takes months or years and cannot order compensation, punishment or change the law.

"It would delay action and postpone reform. It would delay justice for those who urgently need it," Mr Turnbull told Mr Shorten.

Professor Ramsay told The Australian Financial Review he'd already started the review process and the consultations would be extensive.

"We will examine international developments in this area. We will then review the evidence we receive, including from public submissions, and put forward recommendations to government through the interim and final report," Professor Ramsay said.

He said the three existing financial dispute schemes together hear tens of thousands of disputes each year that couldn't go to the courts.

"If the starting point is recognition of the importance of the schemes, you need to go through a rigorous process to determine whether any changes are necessary to deliver a more effective outcome for users," he said.

The banks declined to comment publicly on Thursday on the prospect of a new tribunal.

Gaps in framework

But sources said the Ramsay panel is the right body to determine whether there are any gaps in the current framework, whether a new tribunal was needed and what its powers would be.

"How we deal with customer mistakes is very important but it is hard to be supportive of something when you are not sure how it works in practice," said one banker.

There is broad support in the banks to create a "one stop shop" so that customers with grievances against a bank have a single point of contact with the system to have that resolved.

The Consumer Action Law Centre, Financial Rights Legal Centre, Financial Counselling Australia and Consumers' Federation of Australia jointly wrote to the Prime Minister, the Treasurer and the Minister for Financial Services on Wednesday, saying it was unclear how a new tribunal might improve access to justice, and that it may in fact deliver worse outcomes.

The letter also expressed concern that a tribunal may drag out or delay issues even further, and confuse Australians with another complex and legalistic forms of dispute resolution.


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