Bill Shorten says an analysis by the parliamentary library shows the number of complaints to the financial ombudsman service (FOS) increased by 60% in the past seven years while bank profits have skyrocketed.
Shorten has used the figures to argue that a banking tribunal, now favoured by Coalition members such as Nationals senator John Williams, would not work to stem complaints and has again called for a royal commission into the banks.
But Williams told Guardian Australia that the FOS can only investigate disputes with monetary values $500,000 or less. For example a complaint about a loan worth more than $500,000 cannot be resolved by them.
As a result, a new tribunal could cover many complaints which currently have no other redress than the court system. Williams said the tribunal appeared to have the support of Malcolm Turnbull, the treasurer, Scott Morrison, and the deputy prime minister, Barnaby Joyce.
“It will be quicker and simpler than a royal commission and will be able to review documents, order mediation and once the tribunal makes a resolution that is binding on the banks,” Williams said.
“It will revolutionalise the way people seek justice in the financial industry.”
He said it would cost customers nothing and would save the banks many millions in legal fees. But Williams remains in favour of a royal commission into financial services and also white collar crime.
Meanwhile Labor is hoping the return of parliament will place the prime minister under continued pressure for a royal commission and he disagreed with Williams over a bank tribunal.
“While the banks have been getting richer, the rip-offs and rackets have been getting worse,” Shorten says.
“There’s already an Ombudsman in place but the number of people getting ripped off has been going up and up.”
Labor says the analysis shows in 2014-15, new complaints were up to 31,895 compared with 19,107 in 2008-9. Credit was a big source of complaints, rising from 6731 in 2008-9 to 16,458 in 2014-15.
Meanwhile, in the same years, the profit of the big four banks had increased markedly. In figures provided by Labor, between June 2008 and June 2015, Commonwealth Bank’s annual net profit (adjusted to 2015 dollars) went from $5.5bn to $9.1bn. Over the same period, Westpac’s annual net profit (adjusted to 2015 dollars) went from $4.5bn to $8.2bn.
On the same basis, ANZ went from $3.5bn to $7.8bn in 2015 while NAB’s profit went from $3.6bn to $5.8bn – though it had reached a high of $6.8bn in June 2007.
The banks have been under sustained pressure since Labor took up the call for a royal commission prior to the election. It was first mooted by Williams seven years ago and then backed by the Greens following a series of scandals involving financial advisors, rate-rigging allegations and life insurance payouts.
At the last election, the Greens went further, announcing they would support using a royal commission to examine whether banks should be broken up to split the retail arms from their investment and financial advice arms in response to recent scandals.
Responding to the pressure, Malcolm Turnbull announced that the big banks chief executives would have to front a house parliamentary committee every year to account for their decisions, including failures to pass on full interest rate cuts.
Last week, Commonwealth Bank boss Ian Narev warned Labor its “bank bashing” risked damaging overseas investor confidence and he lamented continuous cycle of election-campaign politics.
Williams said he had hoped Turnbull would make the banks front a joint committee rather than a house committee because it could include senators who have a long history of keeping the banks accountable.
Williams said he will also press on with reconstituting a senate committee inquiry into the life insurance industry when the parliament sits again in the week of August 30.
He expects to have his terms of reference approved by the Coalition partyroom so that a senate economics committee could continue to investigate the life insurance industry after allegations that CommInsure denied legitimate claims from sick and dying customers. The allegations were made in a recent Four Corners program, by Fairfax journalist Adele Ferguson.
Williams said he believed changes instituted by the Australian Bankers Association, such as an independent review of remuneration such as commissions and payments, showed bank culture was changing slowly.
