Opening statement by ASIC Commissioner Sean Hughes at the inquiry into corporate sector engagement with Aboriginal and Torres Strait Islander consumers, Wednesday 15 December 2021.

Introductions

• (Sean Hughes): Thank you for the opportunity to appear today on behalf of the Australian Securities and Investment Commission, attendees from ASIC will take a moment prior to our opening statement to provide their names, roles and lands from where they are attending:
• Witness introductions:
  • Sean Hughes, Commissioner – ASIC
  • Leigh Coughlan, Senior Manager, Indigenous Outreach Program
  • Danille Abbott, Senior Lawyer, Indigenous Outreach Program
  • Jaymee West, Analyst, Indigenous Outreach Program

Statement

As Committee members would know, ASIC is Australia’s corporate, markets, financial services and consumer credit regulator. As set out in our submission, we have a long held and enduring commitment to supporting the financial lives and experiences of Aboriginal and Torres Strait Islander consumers and investors.
Our vision is for a fair, strong and efficient financial system for all Australians.

To achieve this, we use our regulatory tools to change behaviours to drive good consumer outcomes, take targeted regulatory action against misconduct and to help all Australians to be in control of their financial lives.

Our recently published 2021-2025 Corporate Plan, includes, as one of our four key priorities over the near term:

• Reducing risk of harm to consumers exposed to poor product governance and design.

ASIC has acted against a range of practices and poor conduct that have resulted in negative outcomes for Aboriginal and Torres Strait Islander consumers. Many of these actions are covered in the regulatory outcomes referred to in our submission. There are various reasons underlying these practices and poor conduct.

Poor corporate sector practices

We see providers exploiting the fact that some Indigenous consumers may have limited choice in financial products and services, or limited experience in managing them. Where there are essential needs, or family obligations such as those related to Sorry Business, we hear stories of consumers with more than one, two or three small credit contracts such as payday loans, then possibly extending into buy now, pay later products, to manage essentials.

Geographic and language barriers persist in access to financial services such as banking or superannuation, and business models continue to facilitate, or not take account for, the common tendency of Aboriginal and Torres Strait Islander peoples towards gratuitous concurrence.[1] Where firms engage in pressure selling and door to door sales, this can lead to poor consumer outcomes. In such instances, consumers enter into agreements for products or services that they do not understand, and in many cases, cannot afford.

Across financial services and products, we continue to see an absence of tailoring to meet the values, needs and experiences of Indigenous consumers. This failure of financial services firms to tailor products and services extends to meeting the needs of Indigenous consumers when it comes to Sorry Business – there is an absence of safe, accessible products which assist Indigenous consumers to prepare for and manage funeral costs. This again puts pressure on consumer outcomes in locations across Australia.

Good corporate sector practices

However, ASIC does see examples of positive engagement with Aboriginal and Torres Strait Islander consumers and communities. This occurs where there is a strong understanding on behalf of businesses of the needs, experiences and priorities of their Indigenous consumers.

Examples of this positive engagement include: prioritising face to face service provision, employing local Aboriginal and Torres Strait Islander people as team members, and, where a physical presence cannot be maintained, partnering with local organisations to provide alternative access, through regular outreach services, pop-up hubs or access points.

ASIC’s commitment to the RAP process

I wanted to take this opportunity to refer to ASIC’s commitment to the Reconciliation Action Plan (RAP) process.

ASIC’s latest draft RAP provides a new outcomes measurement approach for ASIC. This means ASIC is committing to shift its focus from outputs, and instead track the impact of our activities.

To deliver more impact on engagement with Aboriginal and Torres Strait Islander consumers, ASIC has committed to:

• Increasing Aboriginal and Torres Strait Islander stakeholder trust in ASIC, including consumers’ trust;
• increasing the willingness of Aboriginal and Torres Strait Islander stakeholders to engage with ASIC to support regulatory outcomes; and
• a greater likelihood that Aboriginal and Torres Strait Islander consumers will come to ASIC for support with financial products and services challenges, including by use of information on the Moneysmart website.

While we continue to develop the actions toward these outcomes, we look forward to sharing our progress with others, across the government sector, industry and community representatives.

Conclusion

Following the work we have undertaken to develop our Indigenous Financial Services Framework, our key learnings that support strong financial outcomes for consumers, are:

• Acknowledging the continuing existence of Indigenous economies
• The need for truth-telling about Indigenous participation in the financial system
• Understanding overall wellbeing and the interconnectedness of money
• Recognising “Success Our Way”.

ASIC encourages others in the financial system to prioritise understanding these learnings and incorporating them into their own engagement with Indigenous consumers.

We will leave our opening comments there and thank the Committee for the invitation to appear before this inquiry. We now welcome any questions from the Committee.

[1] The term “gratuitous concurrence” refers to the practice of saying ‘yes’ in answer to a question, or no to a negative question, regardless of actual agreement, or understanding of what is being asked. It is often utilised by individuals who are being questioned in a language they do not understand or speak well, or where the individual perceives the asker of the question to hold the balance of power in the situation, but it is not limited to these circumstances.