The opposition leader, Bill Shorten, has revealed Labor will attempt to use the narrow election result to push for its own policies, including renewing calls for a royal commission into banking.
But the idea has lost the support of one of its key advocates on the government side, MP Warren Entsch, who told Guardian Australia he now preferred a model whereby an independent tribunal could award compensation to victims of financial scandals.
When asked whether the opposition would pursue its own bills in the new parliament, Shorten told ABC’s AM on Tuesday that Labor had “clear views on the banking royal commission”.
However, royal commissions can only be said up by the executive, not legislation, suggesting Labor may need some other mechanism to increase scrutiny on banks.
“I don’t see why the government is so persistent in defending and covering up excesses in the banking sector and financial services industry,” Shorten said.
“That issue is not going away – Labor is going to keep pursuing that, for example.”
Labor first backed a royal commission in April, following a call for it spearheaded by the Greens and a cross-party grouping including Nationals senator John Williams and independent Nick Xenophon.
The Coalition government resisted calls for a royal commission, favouring increasing the power and resources of the Australian Securities and Investment Commission.
The idea won support from Williams and Entsch, who said at the time that a full royal commission was required to consider “the profit-driven and immoral activities of the big banks” and ensure “an appropriate level of compensation to clients for past wrongs”.
But on Tuesday Entsch said he was concerned that “by the time we get a royal commission up it could take several years”.
“My concern is [aggrieved customers] may not be around for any outcome. And that their problem is they can’t get access to any opportunity for retribution unless they go through lawyers, and they are already cleaned out,” he said.
Entsch said he preferred a no-cost tribunal that could establish misconduct and make binding determinations to award compensation.
A report in May from a Senate committee inquiry into customer loans recommended the banking industry be required to fund such a tribunal if financial institutions did not appoint independent experts to consider restitution for customers who feel they have been ripped-off.
Labor senators issued a dissenting report saying the proposal did not go far enough and calling for a bank royal commission to consider “widespread illegal and unethical behaviour” in the industry.
Entsch said the government should consider structuring penalties so financial institutions had to pay triple the amount ripped-off from customers, with one-third to go back to customers and the rest to fund the tribunal.
“That would be a serious deterrent,” he said. “These banks will play silly buggers until their customers die … and they can’t take the big banks on with a pensioner’s income.
“Rather than posture for a royal commission, if we can set this independent tribunal up … I think that would be infinitely more sensible.”
At a press conference on Tuesday Shorten said Malcolm Turnbull would be “on probation” from his backbench in this parliament because he has taken the Coalition to a post-election margin of just one seat.
He said Turnbull would not be able to stop a royal commission into the banking industry.
“I am talking with my senior leadership about the best way to advance the debate of the royal commission into the banking sector,” he said.
“Mr Turnbull thinks by scraping across the line by one seat, he can protect the banks from the legitimate scrutiny which Australians are demanding of our banking sector.”
The Australian Bankers Association (ABA) favours self-regulation. Its chief executive, Steven Munchenberg, has said that “in the vast majority of cases, customers are happy with their dealings with their bank [in dispute resolution situations], but we recognise this is not always the case”.
In early May, he announced banks would ensure they had an independent customer advocate within each bank “to offer guidance and support to customers to resolve complaints quickly”.
“Banks will also continue to consult with Asic on its work to improve customer remediation programs. We support expanding these programs from personal advice to cover all types of financial advice and products.”
Williams told Guardian Australia he was working with the ABA to develop an improved code of conduct but if it didn’t sign up, he favoured a mandatory code and a bank royal commission was still on the table.
He supported Entsch’s proposal for a low-cost tribunal to issue binding compensation orders.
