Strip banks’ super rights, says Labor

Bill Shorten firmed calls to strip banks of rights to manage super, as he was accused of a blunder over the Hayne inquiry.

Labor’s submission was made by Chris Bowen and Bill Shorten, pictured, along with financial services spokeswoman Clare O’Neil. Pic: AAP

Bill Shorten has firmed his call to strip major banks of the rights to manage superannuation, and called on finance executives to pay back victims of bank scandals.

After previously floating the idea early this month as “just an idea”, the Labor leader today said the banks should now consider bringing in more independence to their superannuation businesses.

“I do think that the banks need to consider, and they shouldn’t wait until we’re told by a Royal Commission, that what they need to do is put the administration, or the trusteeship of superannuation, out of the hands of the bank and have independent organisations act as trustees,” Mr Shorten said.

Speaking in Melbourne after hosting a roundtable for banking victims, Mr Shorten said there did not need to be new laws to stop banks charging fees to dead people.

“When are they going to wake up and smell the roses,” he said.

“We’ll see the recommendations of the royal commission. We’ll see what we can work with in the meantime.”

Labor financial services spokeswoman Clare O’Neil said it was time the banks made good on their pledge to change perceptions around the financial industry.

She said it was time to “make sure these bank victims are properly compensated for what has happened to them”.

Their comments came after Labor was accused of a “blunder” in its submission responding to the interim report of the royal commission.

Labor today appeared to have ignored the instructions of banking royal commissioner Kenneth Hayne for submissions in response to his interim report, opting instead to promote its own banking victim “roundtable” rather than answer policy questions put forward by the former High Court judge.

The Greens said the opposition had had a chance to show how it might fix the banking system, but had “blown it”.

In its submission, publicly released today, Labor said it was concerned the inquiry did not focus on the way banks had used highly-paid lawyers to silence customers who complained.

The submission, made jointly by Mr Shorten, Ms O’Neil and opposition treasury spokesman Chris Bowen, drew on stories told to ALP politicians by people who attended 15 roundtables across Australia.

Although the royal commission has considered more than 10,000 submissions made by victims of rogue financial outfits and Australia’s largest institutions, Labor complained that only 27 victims have been able to tell their stories in public at the royal commission.

It chose to establish its own town-hall style roundtables to allow victims to relate their experiences.

“As this submission outlines, the stories of victims we have met with through our roundtables have shed light on several types of misconduct that the royal commission has not had the time to inquire into,” the 18-page Labor submission says, before listing a number of “key findings” from the roundtables.

While the Labor submission said the legal system was not working for customers, external dispute resolution schemes and hardship policies were inadequate, and that a closer inquiry into receivers and administrators was warranted, the submission did not answer any of the policy questions raised by Mr Hayne.

In its instructions for submissions, the royal commission asked only for responses “on policy issues identified in the interim report” which was released late last month, and specifically said it “is not seeking information relating to individual disputes or instances of misconduct or conduct falling below community standards as part of this process”.

“Submissions relating to past misconduct or conduct falling below community standards have now closed.

“In preparing your submission, you should have regard to the policy issues and general questions outlined in chapter 10 of the interim report,” the commission says.

“The commission is now shifting its attention from past experiences to proposals on what should be done in response to the issues raised or conduct uncovered within the banking, superannuation and financial services industry.

“The commission reserves the right not to publish submissions or may decide to redact information within a submission. This includes circumstances where the information is not relevant to the policy issues identified in the interim report.”

Questions Mr Hayne had asked submissions to respond to included: “Can conflicts of interest and duty be managed?”; “Should financial product sellers be permitted to provide financial advice?”; “Should distressed agricultural loans be managed only by experienced agricultural bankers?”; “Should more banks have a telephone service staffed by employees with specific training in assisting indigenous consumers?”

The submissions will be used to inform the royal commission’s final round of public hearings to be held in November, before Mr Hayne produces a final report and recommendations by February.

The Australian asked the Labor MPs for comment.

In an earlier statement, Ms O’Neil said the stories Labor MPs had heard were “harrowing”.

“Federal Labor is ensuring the experiences of victims are at the heart of the banking royal commission, today releasing a submission of victim stories from roundtables held around the country,” Ms O’Neil said.

“These stories must be a part of our national conversation when we consider what our banks must do to regain the trust of the Australian people,” she said.

Greens treasury spokesman Senator Peter Whish-Wilson labelled the Labor document a “blunder” which elaborated on topics Mr Hayne specifically asked not be included.

“I can’t see how Labor’s submission that entirely focuses on these matters would even be considered by the commissioner,” Mr Whish-Wilson said.

“Despite a clear request for submissions on these policy reform questions, Labor has not put up a single policy reform proposal on these topics to the commission. I do not know why they have misread the instructions so badly,” he said.

“Labor had a chance, like everyone else, to say how they will fix the system. We had hoped that they would put forward some bold reforms, but unfortunately this is not yet the case.

“It would be indefensible for Labor to go to the next election without putting up policies about what it will do to reform the banking system. This round of submissions was Labor’s chance to show real determination to reform the banking system and it appears for now that they’ve blown it.”