Ross Greenwood speaks to Senator John ‘Wacka’ Williams ahead of the Banking Royal Commission which begins this week.
Introduction: Banking royal commission set for first intake of evidence
Ross Greenwood: Tomorrow is the beginning of evidence being taken in the Royal Commission into banking and financial services in Australia. This is the important moment because quite clearly the build-up to this has been significant. There’s been a range of scandals at different banks, a range of issues from bank bills swap rates to financial planning, to insurance companies, to credit cards.
Tomorrow when they start to hear evidence a lot of it’s going to be based on car financing. It’s going to be based on mortgages, on credit cards some of it. One man who has been pushing continuously and has been a sharp critic of the banks throughout this is the National senator John Williams who is online right now. Many thanks for your time Waker.
Interview with: John Williams, Senator
John Williams: Good to be with you Ross as always.
Ross Greenwood: Hokey doke so tomorrow the Royal Commission really starts in earnest taking evidence. Do you think we’re going to hear stories that we’ve not previously heard from those who may be aggrieved by their service or indeed the conduct of their banks?
John Williams: I think no doubt it all Ross there will be some new information coming forward about bank behaviour and manage funds and management of money investment schemes et cetera no doubt at all. Very pleased that Commissioner Haines and his opening statement first he said if you’ve signed confidentiality agreements you’re free to come forward.
He’ll be really keeping a close eye on the case. He asks the question, why would one of the institutions want to hide these people coming forward? Very pleased about that Ross but the time will tell us interim report during September winding up next March. It may even extend if there’s a lot of information and further direction for the commissioner to go down.
Ross Greenwood: Here’s the point about this because you’ve done a lot of these investigations through the Senate inquiries that have been held. You’ve quizzed the bank bosses, you’ve heard the submissions from victims of bank, not fraud necessarily but certainly mismanagement of various areas of bank. Including financial planning where some of the worst scandals have taken place.
Also, insurance, where banks particularly the Commonwealth, in this particular case have clearly had terms and conditions that many people would have thought, were if not onerous, then certainly almost unworkable. From that point of view, where do you believe that the most controversial of the submissions to this Royal commission where do you believe that will be?
John Williams: Ross no doubt financial planning is going to mention the life insurance. You’ve mentioned where we’ve just completed the inquiry, a thorough inquiry for many many months in the life insurance industry. No doubt there’ll be many recommendations come out at probably next week when we get back to parliament but schemes where you have legitimate claims and for some reason or some outdated criteria, you’re not getting paid. People are losing faith in the insurance industry in this respect and Ross that’s a big thing of this Royal Commission.
I hope at the end of it the wrongdoings are brought forward, they’re corrected and people can have their confidence restored in Australia’s financial system. Because at the moment much of that confidence has been eroded due to the financial planning and the bank bill swap rates and those track allegations and life insurance and credit card ripoff et cetera. I think that’s the ultimate goal to restore confidence in the financial system.
Ross Greenwood: Yes, because the interesting thing I did note in the background paper that the Royal Commission has pulled out. It says the Commonwealth bank has 17 million customers, business, and individuals in Australia. Westpac 13 million. The National Australia make 9 million customers. The Ion said 8 million customers. The fact is Australians have to have confidence in their banks and also confidence if the banks do something wrong.
This perhaps I think is the one strengths of our banks, they have at least got the balance sheet that they can make good. Which unfortunately with many smaller organizations that might have financial scandals or might missell products quite often they just go broke and people end up ordinary citizens end up with no money out of them.
John Williams: A very important issue Ross, when compensation has to be paid banks are big enough and financially strong enough to do that. It’s important we have strong banks, we have very strong banks in Australia. Good, they make good profits, the shareholders do well out of them. They’ve got to treat their customers fairly, but I think the Royal commission commissioner will have a good look about that about the treatment of customers. Because this culture in the bank where just drive the profit, put people into risky schemes with financial advice to get commissions et cetera, it’s been unacceptable. I think we’ll see a lot of change and change for the better in their days ahead of us.
Ross Greenwood: Okay. One of the other big campaigns that you have conducted through the Senate the inquiries there is in regards to franchising. On this program, we have said for some time that we think something needs to change in franchising. Otherwise what could otherwise be a very convenient and even perhaps in the past a very safe way for people to go into their own business, now appears to be fraud.
Indeed many people would I think be at least a little bit wary and nervous of putting significant amounts of their retirement income, their superannuation into a franchise if they thought they were going to be mistreated. I do note that the former Brumbies bakery joint founder Michael Sherlock has called for urgent reform to the board of the Franchise Council of Australia following a series of disasters in this area. I spoke to him last week, this just a little of what he told us.
Michael: “What’s happening now, my favourite my two nearest Brumbies stores they merged and they’ve gone off as independent. They can now buy their ingredients, their flour cheaper than what they could through our doing. That was quite an impulse on all of the purchasing things you have to buy, the cost of renewals and everything like that that’s become unviable and so now they’re leaving in droves.”
Ross Greenwood: Senator John Waker Williams I do understand you’re in conversation with the small business minister Craig Laundy in regards to some terms of reference for an inquiry into the franchising industries. Is that correct?
John Williams: That’s correct Ross, just winding up so the finalizing the terms of reference so next week when we get back to parliament hopefully with the approve of our colleagues we can move the inquiry into it. Ross few weeks ago I met with about 30 franchisees. I had minister Craig Laundy and his staff with me. Craig Laundy is a great businessman, he understands business like the back of his hand. He can see the problems there. We’ve done the legislation inquiry in the legislation about the underpayment, we’ve corrected that but the contract–
Ross Greenwood: You mean this is the underpayment of staff whereby a franchisee because they’re being squeezed up themselves not making any money start to squeeze the staff up. Which is a classic 711 or even celtic situation.
John Williams: Yet probably we’ve done a corrective legislation there but the contracts between the franchiser the big company and the little franchisee, often a foreigner or immigrant who buys them they think they’re going down the road of great success it ends up in tears. We’ve seen marriage breakups, houses sold up even one suicide where people had just gone broke. That’s has been treated poorly. Ross and I keep saying life is about fairness. Treat people fairly and I think there’s a lot to look at in this franchise industry, we have it’s a $170 billion industry.
We have more franchises per capita in Australia than in our any other country. We have good franchise McDonald’s, KFC, Hungry Jack’s never even complain but the car industry, many of the car dealers are now getting really put under the pump as well. I was talking at the VICC in Victoria about this just a couple of days ago, we’re concerned about the franchisees with motor vehicles as well. Big industry and we need to see if we get it right so that when people go into franchise in the future they deal with confidence and have a good chance of making a success of their life.
Ross Greenwood: What do you make of this whole situation with the retail food group which has got things like Doughnut King, Michelle’s patisserie, Gloria Jean’s, Brumbies. They’ve got themselves quite clearly they’ve had the issues in trying to get their accounts out. They’ve had issues in regards to having to close franchises some of company-owned stores. Other are actually individuals that have actually put their hard-earned money in. I mean these types of companies do not give the sector a good name.
John Williams: No they don’t, they give it a very bad name and people like in the coffee shops are paying $2.40 for two litres of milk off the franchise or Ross they employ Deanna Kohls with $2 for two litres. They saying that coffee beans I can buy at the supermarket cheap and they get off their franchise zone. The whole idea of a franchise is that the bulk buying by the franchise who buys in big volumes can sell cheap to give them a competitive edge.
That is not the case in many respects and I think there’s a lot to be looked out here. I think there’s need for reform even though we have many many good franchises in Australia that do very well when they work hard and very successful. Sadly there’s too many tearful episodes as well.
Ross Greenwood: I’ll tell you what, the man who’s always sticking up for the bat-line in our Senate, Senator John Waker Williams. As always Waker we appreciate your time here on the program.
John Williams: As always Ross, good to speak to you. Thank you.