Treasury Laws Amendment Bill

01 August 2023


I rise to speak in support of the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023. This is a bill to strengthen our economy and help consumers by enhancing the integrity of consumer markets for credit products, removing obstacles to financial advisers and fostering competition in the provision of clearing and settlement services for cash equities.

I'd like to start by thanking the Assistant Treasurer and Minister of Financial Services for his important work in making the financial services sector in Australia a safer and fairer place for consumers, advisers and businesses. Well-regulated consumer markets for credit products are crucial in a robust and inclusive economy. That's why the Albanese government is reforming the regulation of payday lending in consumer leases through the Financial Sector Reform Act 2022, which was in response to the 2016 review of small amount credit contract laws. That review highlighted the need to address avoidance practices employed by entities using business models not regulated by the credit act.

Any avoidance provisions are aimed at reducing the risk of consumer harm from predatory lenders who modify their business models to dodge consumer protections in the credit act and other financial services legislation. These provisions also extended the scope of ASIC's product intervention orders under the National Consumer Credit Protection Act.

Schedule 1 to this bill ensures that anti-avoidance provisions also apply to ASIC's product intervention orders related to credit products made under the Corporations Act 2001. By doing so, we ensure that predatory lending practices, which pose significant detriment and harm to consumers, are appropriately addressed. ASIC has already issued several product intervention orders to combat this harm, but it is crucial to align the anti-avoidance provisions with orders made under the Corporations Act.

Predatory credit products take advantage of people who are already financially vulnerable, subjecting them to exorbitant fees and interest rates—people like Frank, from my electorate. That's not his real name. He's a father in his 30s who works full time. He turned to payday loans when his son was hospitalised for six weeks. He took out loans to cover expenses, including accommodation costs, household bills and the high repayments incurred on his growing payday loan debts. The lenders allowed him to take out multiple loans. Some he took out to keep up with the debt he'd been sucked into. He ended up owing more than $6,000 to about 10 different payday loan providers and is now on a mental health treatment plan to help him cope with the stress. Schedule 1 of this bill will reduce the risk of harm and limit the operation of predatory lenders who engage in avoidance behaviours, ultimately protecting consumers from exploitation, such as that which Frank experienced.

Schedule 2 of the bill relates to the financial advice industry. It recognises the significance of the financial advice industry and the need to establish robust professional standards within the sector. Good financial advice provided by quality financial advisers is one of the most important pieces of guidance that Australians can use in their lifetime. Quality financial advice can set us up for life and ensure we have enough to live on and enjoy in retirement. The Albanese Labor government is committed to ensuring that Australians have access to high quality financial advice.

Unfortunately, the current education requirements fail to adequately acknowledge the practical experience of financial advisers, thereby neglecting the valuable contributions of experienced professionals. Since 2019, more than 10,000 financial advisers have left the industry, including experienced advisers with unblemished records. Experienced advisers play a critical role in mentoring and supervising new entrants during their professional year, sharing their knowledge and expertise. To address this issue, schedule 2 of this bill removes a significant disincentive for experienced advisers to remain in the industry, ensuring a pool of mentors to guide, supervise and enhance the skills of new advisers. This measure guarantees that consumers receive quality advice as the affected experienced advisers must possess a clean record and pass the financial advisers exam.

Schedule 3 of the bill acts on recommendations from the Council of Financial Regulators to enhance regulatory powers and foster competition within clearing and settlement markets for cash equities traded in Australia. The ASX Group currently holds a monopoly over these services. The proposed reforms will yield substantial benefits for businesses operating in other sectors of the cash equities market, such as financial market operators. Entities that rely on the ASX's clearing and settlement services, like clearing and settlement participants and share registries, will also experience positive effects. Any delays in accessing these systems, coupled with a lack of transparency surrounding fair pricing, can escalate costs and impede innovation. These reforms will empower ASIC to establish rules concerning the governance of clearing and settlement facilities, including those related to board composition and user input in governance matters.

This will grant ASIC the authority to formulate rules governing the ASX's CHESS replacement project. The delayed implementation of this project has incurred significant costs for the broader industry. If a competitor emerges in the provision of cash equities clearing and settlement, ASIC will ensure that competition is both safe and effective by establishing rules pertaining to interoperability between competing facilities. Should a competitor fail to emerge, rules will be in place to ensure competitive outcomes. ASIC will be able to create rules regarding the activities, conduct and governance of clearing and settlement facility licensees. This will guarantee that these services are provided on fair, reasonable, transparent and non-discriminatory terms.

To address situations where clearing and settlement services are controlled by a monopolistic entity, or one with significant market power, the bill introduces an arbitration mechanism. This mechanism will be available to industry participants who rely on access to clearing and settlement services to resolve disputes pertaining to access terms and conditions, including pricing. The intention behind this provision is to serve as a final efficient backstop when good faith commercial negotiations break down. The framework draws inspiration from the national access regime of the Competition and Consumer Act 2010, with some modifications to enhance the efficiency of the arbitration process and ensure timely outcomes for all parties involved.

Finally, schedule 4 of this bill introduces several improvements to the First Home Super Saver Scheme specifically tailored to enhance the experience of first home buyers. The current legislation governing the scheme is inflexible and can lead to poor user experiences, such as instances where individuals mistakenly lock their savings in superannuation until retirement due to application errors. By implementing schedule 4, the operation of the First Home Super Saver Scheme will be enhanced. First home buyers using the scheme will enjoy greater flexibility to amend or revoke their applications to correct errors and ensure the timely release of their savings. These changes will grant the Commissioner of Taxation increased discretion to amend and revoke scheme applications, and individuals will have the opportunity to withdraw or amend their applications prior to the release of the funds. To ensure a smooth transition, the bill includes transitional provisions that apply the technical changes to eligible applications made from July 2018. This allows flexibility for past cases. Transitional provisions extend the flexibility provided by the amendments to users who previously applied to have funds released under the scheme and have since started holding a relevant interest in real property or land.

This bill is an important piece of legislation, and it builds on the progressive reforms already accomplished by the Albanese Labor government in its first year in office. Whether it be reforms to payday lending and short-term credit that we've legislated, making our industrial relations system fairer, or making our world-class superannuation system more sustainable, since coming to government we have been upfront about the challenges facing the economy and the budget. We've inherited $1 trillion of debt and growing spending pressures. Our government is working to build a stronger economy to help ease cost-of-living pressures without asking people to compromise their longer-term financial security. This legislation builds on this by ensuring the financial services sector in Australia is a safer and fairer place for advisers, businesses and consumers—particularly vulnerable consumers.