It has to be said that the report of the Banking Royal Commission is a conservative one.
It does not make any radical recommendations or suggest changes to the law or regulatory framework in relation to financial consumer issues affecting Aboriginal and Torres Strait Islander people. So, will the lives of Aboriginal and Torres Strait Islander people be improved as a result of this report and its recommendations?
More specifically, will consumer protection advocates have a sharper sword to wield when dealing with the financial sector of behalf of Aboriginal and Torres Strait Islander people? The short answer is, it will get a small sharpening.
A number of big issues were identified by the Royal Commission after preliminary consultations with the regulator and Aboriginal and Torres Strait Islander advocacy groups, which helped focus the hearing of evidence at the Darwin sittings.
Notably, levels of financial literacy, remoteness and proof of identity were highlighted as broad issues. Infrastructure concerns, such as the increasing physical withdrawal of banks from remote and regional locations, and access to services delivered through the use of digital technologies like apps or internet banking were also touched upon. As were, industry-specific issues including funeral insurance, superannuation, consumer credit leases, book-up, and banking fees such as overdraft and dishonour fees, and ATM fees.
The sitting in Darwin itself was not an insignificant statement of recognition by the Royal Commission of the uniquely challenging circumstances faced by Aboriginal and Torres Strait Islander people in this context. Evidence was given by the Australian Securities and Investments Commission (ASIC) and Financial Counselling Australia on these big issues. The process adopted by the Royal Commission to hear evidence that affected Aboriginal and Torres Strait Islander people seemed reasonable and appropriate.
However, it became apparent at the beginning of the Darwin sittings that an early, but substantial, shortcoming of the Royal Commission in respect of Aboriginal and Torres Strait Islander people was its scope.
The limited terms of reference set down for the Royal Commission for the sittings meant a number of the big issues highlighted by the Aboriginal and Torres Strait Islander advocacy groups in the preliminary consultation phase were immediately excluded from consideration of the Royal Commission. Among these were book-up, consumer credit leases and payday lending.
Three of the four broad observations made by the Commission that are relevant, although not specific, to Aboriginal and Torres Strait Islander people are ‘the connection between conduct and reward; the asymmetry of power and information between financial services entities and their customers; and holding entities to account’. Banking, superannuation and insurance as sectors, specifically addressed in the report impact the lives of many Aboriginal and Torres Strait Islander people.
Recommendation 1.8 – access to banking services – is a very important one. It recommends changes to the Banking Code in Australia that would compel banks to work with customers who live in remote areas, or who are not adept in using English, to identify a suitable way for those customers to access and undertake their banking.
It further recommends changes to proof of identity for Aboriginal and Torres Strait Islander people, to make it easier for proof of identity requirements to be met, and making changes to prevent informal overdrafts without the prior express agreement of the account holder and the charging of dishonour fees.
If taken up and implemented, recommendation 1.8 has the potential to have real impact on the banking experience of Aboriginal and Torres Strait Islander people, especially those living in regional and remote Australia.
Recommendation 4.1 No hawking of insurance; and Recommendation 4.2 Removing the exemptions for funeral expenses, are equally relevant. Recommendations 4.8, 4.9 and 4.10, which relate to complaint handling and enforceability, also have the potential to create a greater breadth of – and access to– consumer protection because of their specific reference to insurance.
The recommendations are promising in-principle. Hawking and selling practices go to the core of the big issue of funeral insurance. However, the exact wording of any changes to the law remains to be seen, as does whether these changes are effectively overseen and enforced by ASIC.
– Heron Loban is a Torres Strait Islander academic, lawyer and expert in consumer protection. She is currently a Senior Lecturer in law at Griffith University. She is also a director of Desert Knowledge Australia and the Australia Communications Consumer Action Network.