Federal Register of Legislation - Australian Government

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A Bill for an Act to establish a commission of inquiry into banking in Australia with the powers of a Royal Commission, and for related purposes
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Registered 10 Oct 2016
Introduced HR 10 Oct 2016

2016

 

The Parliament of the

Commonwealth of Australia

 

HOUSE OF REPRESENTATIVES

 

 

 

 

Presented and read a first time

 

 

 

 

Banking Commission of Inquiry Bill 2016

 

No.      , 2016

 

(Mr Katter)

 

 

 

A Bill for an Act to establish a commission of inquiry into banking in Australia with the powers of a Royal Commission, and for related purposes

  

  

  


Contents

Part 1—Preliminary                                                                                                             1

1............ Short title............................................................................................. 1

2............ Commencement................................................................................... 2

3............ Simplified outline of this Act.............................................................. 2

4............ Definitions.......................................................................................... 3

Part 2—Establishing the Banking Commission of Inquiry                          4

5............ Banking Commission of Inquiry is established................................... 4

6............ Terms of reference.............................................................................. 4

Part 3—Powers of the Banking Commission of Inquiry                               7

7............ Hearings.............................................................................................. 7

8............ Commission not bound by the rules of evidence................................. 7

9............ Application of the Royal Commissions Act 1902................................ 7

10.......... Application of Commonwealth laws................................................... 8

Part 4—Other matters                                                                                                         9

11.......... Departmental officers.......................................................................... 9

 


A Bill for an Act to establish a commission of inquiry into banking in Australia with the powers of a Royal Commission, and for related purposes

The Parliament of Australia enacts:

Part 1Preliminary

1  Short title

                   This Act is the Banking Commission of Inquiry Act 2016.

2  Commencement

             (1)  Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1.  Sections 1 and 2 and anything in this Act not elsewhere covered by this table

The day after the Governor‑General in Council assents to this Act.

 

2.  Sections 3 to 11

The provisions commence on the day the Consolidated Revenue Fund is appropriated under an Act to the Treasury to fund the Banking Commission of Inquiry.

 

Note:          This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

             (2)  Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.

3  Simplified outline of this Act

This Act requires the Treasurer to establish a Banking Commission of Inquiry within 6 weeks after the Governor‑General in Council assents to this Act.

The Banking Commission of Inquiry has the same powers as a Royal Commission.

4  Definitions

                   In this Act:

ADI means an authorised deposit‑taking institution within the meaning of the Banking Act 1959.

cash rate means the market interest rate on overnight funds.

Part 2Establishing the Banking Commission of Inquiry

5  Banking Commission of Inquiry is established

             (1)  The Treasurer must, within 6 weeks after the Governor‑General in Council assents to this Act, appoint persons to:

                     (a)  conduct an inquiry into the matters specified in section 6; and

                     (b)  report to the Treasurer on the matters (including any recommendations relating to the matters) within 6 months after the Governor‑General in Council assents to this Act.

             (2)  The appointment must be by notifiable instrument.

             (3)  The appointment takes effect on the day after the instrument of appointment is made.

             (4)  The Commission’s report is not a legislative instrument.

             (5)  The members of the Commission have the privileges of members of the House of Representatives.

6  Terms of reference

                   The matters into which the Commission must inquire are:

                     (a)  whether ADIs have benefited (through profits or otherwise) from not passing on in full cuts to the cash rate to home loan borrowers; and

                     (b)  whether there are any mechanisms, legislative or otherwise, that could be used to limit ADIs’ margins on lending where those margins are excessive, and the benefits and risks of using those mechanisms; and

                     (c)  the extent to which ADIs are entering into loans under which the ADI may recover more than the value of the secured property; and

                     (d)  whether there are any mechanisms, legislative or otherwise, that could be used to ensure that ADIs cannot recover more than the value of the secured property under a loan, and the benefits and risks of using those mechanisms; and

                     (e)  the extent to which ADIs are making loans that the borrower could not reasonably be expected to service; and

                      (f)  whether there are any mechanisms, legislative or otherwise, that could be used to ensure that ADIs do not make loans that the borrower could not reasonably be expected to service, and the benefits and risks of using those mechanisms; and

                     (g)  the extent to which ADIs are, by assignment of rights or otherwise, passing to another entity the ADIs rights under loan agreements; and

                     (h)  whether Australian law is being complied with by ADIs in passing to another entity rights under loan agreements; and

                      (i)  whether there are any mechanisms, legislative or otherwise, that could be used to ensure that ADIs do not, by assignment or otherwise, pass to another entity the ADIs’ rights under loan agreements, without banking tribunal oversight and/or mortgagor’s approval, and the benefits and risks of using those mechanisms; and

                      (j)  whether the remuneration packages received by directors and senior managers of ADIs are structured so as to ensure that the ADI not only generates profits to shareholders, but also behaves responsibly and fairly in relation to the customers of the ADI and the broader Australian economy and community; and

                     (k)  whether the remuneration packages received by directors and senior managers of ADIs are:

                              (i)  proportionate to the benefits generated by the ADI, not only for shareholders of the ADI but also for customers of the ADI and the broader Australian economy and community; and

                             (ii)  structured so that only genuine competency in managing the ADI is rewarded; and

                            (iii)  proportionate to the competencies demonstrated by the relevant directors or senior managers in managing the ADI; and

                            (iv)  proportionate to the remuneration packages of the wider Australian community; and

                      (l)  the issue of legislative adoption of non‑recourse lending; and

                    (m)  the issue of legislative regulation of mortgage insurance; and

                     (n)  the establishment of a tribunal with the powers needed, including injunctive powers, to:

                              (i)  oversight and ensure prudential and responsible behaviour by ADIs and their directors, senior managers and staff; and

                             (ii)  provide Legal Aid to parties injured (or potentially injured) by contracts that reflect inequitable powers, and deliver discretionary powers to ADIs breaking statute, equity and common law.

Part 3Powers of the Banking Commission of Inquiry

7  Hearings

             (1)  The Commission may hold hearings.

             (2)  The hearings may be held at such places as the Commission determines.

             (3)  Subject to this Act, the procedure at a hearing is to be such as the Commission determines.

8  Commission not bound by the rules of evidence

                   The Commission is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks fit.

9  Application of the Royal Commissions Act 1902

             (1)  Subject to this section, the Royal Commissions Act 1902 applies in relation to the Banking Commission of Inquiry, and to the Commissioners conducting it, as if:

                     (a)  the Banking Commission of Inquiry were a Royal Commission; and

                     (b)  each Commissioner were a member of a Royal Commission.

             (2)  The regulations may, for the purposes of the application of section 9 of the Royal Commissions Act 1902 in accordance with subsection (1) of this section, provide for or specify matters of the kind referred to in subsection 9(2) of that Act.

             (3)  Section 9 of the Royal Commissions Act 1902, in its application in accordance with subsection (1) of this section, has effect as if those regulations were regulations made for the purposes of subsection 9(2) of that Act.

             (4)  Sections 10 and 15 of the Royal Commissions Act 1902, in their application in accordance with subsection (1) of this section, have effect as if references in those sections to offences against that Act included references to such offences as apply in accordance with subsection (1) of this section.

10  Application of Commonwealth laws

                   The law of the Commonwealth (including the general law) applies in the same way to the Banking Commission of Inquiry as it would apply to a Royal Commission.

Part 4Other matters

11  Departmental officers

             (1)  The Secretary of the Treasury may enter into an arrangement with the Commission of the Banking Commission of Inquiry to make APS employees in the Treasury available, for a period not exceeding the duration of the Banking Commission of Inquiry, to assist with the conduct of the Banking Commission of Inquiry.

             (2)  In performing functions and exercising powers to the extent reasonably necessary to assist with the conduct of the Banking Commission of Inquiry, an APS employee made available under such an arrangement:

                     (a)  is subject to the directions of the Commission; and

                     (b)  is not subject to the directions of the Secretary or the Treasurer.