Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Banking Commission of Inquiry Bill 2016
EXPLANATORY MEMORANDUM
and
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Circulated by authority of
Bob Katter
Banking Commission of Inquiry Bill 2016
OUTLINE
The bill seeks to establish and Banking Commission of Inquiry. It will hold the same powers as a
Royal Commission. A Commissioner will be appointed by the Treasurer to conduct the enquiry.
The Terms of Reference will address:
1) ADIs not passing on full cuts to the cash rate to the customer,
2) ADIs home loan practices in relation to:
a. lending where the margins are excessive,
b. entering into home loans under which the ADI may recover more than the value of
the secured property,
c. making loans that the borrower could not reasonably be expected to service,
d. ADIs "selling on" loan debt contacts and agreements to outside entities.
3) The culture of remuneration for ADI directors and managers.
4) The legislative adoption and practice of non-recourse lending and its implications,
5) The legislative regulation of mortgage insurance,
6) The establishment of a tribunal with the critical powers needed as follows:
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.
FINANCIAL IMPACT
The bill will have no financial impact.
NOTES ON CLAUSES
Clause 1 - Short title
This clause is a formal provision and specifies the short title of the Bill as the Banking Commission
of Inquiry Act 2016
Clause 2 - Commencement
This clause provides for the commencement of Sections 1 to 2 of the Act the day the Act receives
Royal Assent, and the commencement of Sections 3 to 10 on the day the Consolidated Revenue
Fund is appropriates under an Act to the Treasury to fund the Banking Commission of Inquiry.
Clause 4 - Definitions
This clause sets out definitions. Specifically the term ADI means an authorised deposit-taking
institution within the meaning of the Banking Act 1959.
Clause 5 - Banking Commission of Inquiry is established
Subsection (1) of this clause is the appointment of a person to conduct the Inquiry in the role of
'Commissioner'.
Subsection (2) of this clause establishes the appointment must be notifiable by instrument.
Subsection (3) of this clause provides the timeframe of the appointment to take effect.
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.
Subsection (4) of this clause asserts the Commissioner's findings do not carry the power to be
ratified into legislation.
Subsection (5) of this clause asserts the members of the Commission have the same Parliamentary
Privilege as Members of the House of Representatives.
Clause 6 - Terms of Reference
This clause outlines which matters the Commissioner is to inquire as follows:
Subsection (A) of this clause outlines the matter to inquire into if, and how ADIs benefit
from not passing on the full cuts to the cash rate on to Home loan borrowers
Subsection (B) of this clause outlines the matter to inquire of any mechanisms that can be
used to limit ADI lending where the margins are excessive
Subsection (C),(D) of this clause outlines the matter to inquire into what extent ADIs create
home loans where it can recover more than the property assets and how can this practice
can be eradicated.
Subsection (E), (F) of this clause outlines the matter to inquire into what extent ADIs make
loans the borrower cannot identifiably service and how can this practice can be
eradicated.
Subsection (G), (H), (I) of this clause outlines the matter to inquire into what extent ADIs
"sell on" loan agreements to another entity and if so, does Australian law comply and how
can this practice can be eradicated.
Subsection (J) of this clause outlines the matter to inquire if the remuneration 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
Subsection (K) of this clause outlines the matter to inquire if the remuneration received by
senior managers and directors of ADIs are
I. Behaves responsibly and fairly to shareholders, customers and the broader
economy
II. Proportionate to the benefits received by the shareholders, customers and
to the broader economy
III. Are genuinely awarded for competency in management
IV. Are proportionate to competencies
V. Proportionate to the management in the wider, (commercial) Australian
community
Subsection (L) of this clause outlines the matter to inquire the issue in to the legislative adoption
of non-recourse lending.
Subsection (M) of this clause outlines the matter to inquire the issue of legislative regulation of
mortgage insurance.
Subsection (N) of this clause outlines the requirement of the inquiry to establish a tribunal with
the critical powers needed as follows:
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
Clause 7 - Hearings
Subsection (1) of this clause is the power of the Commissioner to carry out hearings for the
purpose of the inquiry.
Subsection (2) of this clause is the location of the hearings may be determined by the
Commissioner.
Subsection (3) of this clause is the procedure of the hearings may be determined by the
Commissioner and Subject to the Act.
Clause 8 - Commissioner not bound by the rules of evidence
The Commissioner may inform himself or herself on any matter in such a manner as he or she
thinks fit.
Clause 9 - Application of the Royal Commissions Act 1902
The Banking Commission of Inquiry is subject to the Royal Commissions Act 1902 in the following
instances:
(a) the Banking Commission of Inquiry were a Royal Commission; and
(b) the 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.
Clause 10 - Application of laws relating to disclosure
Commonwealth law that relates to the disclosure of information applies to disclosure of
information to the Banking Commission of Inquiry.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Banking Commission of Inquiry Bill 2016
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act
2011.
Overview of the Bill
The bill seeks to establish and Banking Commission of Inquiry. It will hold the same powers as a
Royal Commission.
Human rights implications
This Bill does not unacceptably limit any of the applicable rights or freedoms.
Conclusion
This Bill is compatible with human rights as it does not raise any human rights issues.
Hon Bob Katter MP