Second Reading SpeechMr FRYDENBERG (Kooyong - Treasurer)
That this bill be now read a second time.
The Financial Sector Reform (Hayne Royal Commission Response - Stronger Regulators (2019 Measures)) Bill 2019 forms part of the government's comprehensive response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which is set out in the Financial Services Royal Commission Implementation Roadmap released on 19 August 2019.
Since the release of the royal commission final report, the government has implemented 16 of the commitments it outlined in its response. We have:
- legislated to end the grandfathering of conflicted remuneration;
- instigated and responded to the APRA Capability Review;
- expanded the remit of the Australian Financial Complaints Authority to require it to establish a new historical redress scheme to consider eligible financial complaints dating back to 1 January 2008;
- amended legislation to extend the product intervention power to, and impose design and distribution obligations on, all financial and credit products within ASIC's regulatory responsibility;
- initiated work with the states and territories towards establishing a national farm debt mediation scheme; and
- banned the inducement of employers by superannuation trustees and introduced civil penalties on superannuation trustees and directors for breaching the law.
Through this bill, the government is further delivering on its commitments by implementing the recommendations of the ASIC Enforcement Review Taskforce report.
This bill ensures that ASIC has the powers it needs to effectively enforce the laws it administers.
Specifically, the bill amends the law to:
- bring ASIC's current range of search warrant powers into line with those in the Crimes Act;
- provide ASIC with access to telecommunications intercept material for the investigation and prosecution of serious corporate law offences;
- strengthen ASIC's licensing powers;
- align the consequences under the Corporations Actfor making a false and misleading statement to ASIC with those in the National Consumer Credit Protection Act; and
- extend ASIC's banning powers to ban individuals from managing financial services or credit businesses.
ASIC is responsible for investigating serious indictable offences involving corporate criminal misconduct - those that carry a prison sentence of 12 months or more. This bill harmonises and aligns ASIC's various search warrant powers with those contained in the Crimes Act, removing the current requirement for ASIC to 'forewarn' those under investigation, which provides an opportunity to destroy or conceal evidence of misconduct.
The bill also amends the law to allow ASIC to access and receive telecommunications intercept material to investigate and prosecute serious offences, bringing them into line with other agencies responsible for investigating serious offences.
Strengthening ASIC's licensing powers will ensure that credit and financial service licensees, and the people who control them, are fit and proper to be carrying on a financial services business. Ensuring that controllers such as significant shareholders are fit and proper is essential in deciding whether a licence should be granted or retained.
This bill also amends the law to allow ASIC to ban a person from performing functions in a financial services or credit business where they are not a fit and proper person and provides new grounds for ASIC to ban a person, for example where they have twice been linked to a refusal or failure to give effect to a determination of the Australian Financial Complaints Authority.
The measures in this bill have been the subject of extensive public consultation, both by the ASIC Enforcement Review Taskforce and in their exposure draft form. The Legislative and Governance Forum for Corporations was consulted in relation to the bill as required under the Corporations Agreement 2002 and the national credit agreement 2009.
Full details on these measures are contained in the explanatory memorandum.