SubmissionLetter

THIS SUBMISSION LETTER IS CONFIDENTIAL TO THE NICK XENOPHON TEAM - FOR THE TIME BEING

Time to treat the unconscionable CAUSE and not merely put more bandaids on the often catastrophic EFFECTS

Previous Royal Commissions have been granted both time and budget extensions. In April 2016, Labor pledged a Royal Commission into the Financial Services Industry in Australia that would assertedly cost $53 million over two years, as costed by the independent Parliamentary Budget Office.

when Labor has not announced specific Terms Of Reference, saying it would do so upon taking government?

* ultimate tableable for tabling in the Lower House of the Commonwealth Parliament time would double to four years or triple to six years or take even longer.

In order to protect the credibility of the Senators that have supported a Royal Commission, pursuant to the Labor Party's website, an accredited independent third party should review the independent Parliamentary Budget Office assumptions, and scope of investigative works, to opine (for the public domain) on the integrity of the forecast cost of only $53m, to be delivered in two years.

The Writer opted to research Credit Card injustices after reading SMH 'Business Day' article "Middle class hit by debt..... credit cards bills are taking their toll" on Sat. 21 Jan 2009, where SMH journo, Lucinda Schmidt, interviewed Tony Devlin, Head Financial Counsellor, Salvation Army's Moneycare service. Tony commented that "There are far more middle-income earners seeking a way out of the desperate cycle of huge mortgage repayments and mounting credit card debt.........And people try to keep the ship afloat by using more credit cards."

The Writer spoke to Tony Devlin on Wed 7 Dec '11. Tony told him "It is not uncommon to meet people in financial trouble who had significant debts on between 6 and 10 credit cards." SMH's, Lucinda Schmidt, scribed a powerful message about the damage of Predatory Advertising upon Financially Uneducated And Vulnerable Australians that pay for the Line/s of Credit that Transactors materially benefit from.

Would you ask one of the Nick Xenophon Team that possesses financial acumen and legal skills to read the below four letters (also listed at the very top of this page) and then mull through some of the 500+ Defined Terms and Documents that the Writer has prepared over the last six years in researching Credit Card Products which uniquely defy the laissez faire market pricing mechanism, known as the User Pays Principle (Your team member/s will need to click on a lot of embedded URLs):

Immediately below are extracts from 4. above:

"......unfortunately the circumstances outlined in your letter and accompanying materials do not meet our criteria for pursuit of a class action........the legal threshold for unconscionable conduct is difficult to establish........the generality of unconscionable provisions, as well as the effect of the High Court's decision mentioned above mean that there are significant risks in pursuing a claim for unconscionable conduct in relation to the circumstances out lined in your letter .........we suggest that you contact your local member of Parliament to continue your advocacy on behalf of vulnerable consumers.

Maurice Blackburn response letter cited the High Court's decision in July 2016 in the case of Paciocco & Anor v the ANZ Bank ("ANZ") to dismiss two appeals from the Full Court of the Federal Court of Australia. Below are extracts of commentary on Paciocco & Anor v the ANZ Bank:

"The majority (by 4 votes to one) of the High Court held in the first appeal that late payment fees charged by the respondent, ANZ, on consumer credit card accounts were not unenforceable as penalties, and in the second appeal that the imposition of late payment fees did not contravene statutory prohibitions against unconscionable conduct, unjust transactions and unfair contract terms. The first appellant, Mr Paciocco, held two consumer credit card accounts with the ANZ. The terms and conditions of the accounts required Mr Paciocco, following receipt of a monthly statement of account, to pay a minimum monthly repayment. If the minimum monthly repayment plus any amount due immediately was not paid within a specified time, a late payment fee was charged. The late payment fee was $35 before December 2009, and $20 thereafter. 26 late payment fees were charged to Mr Paciocco's accounts. The majority of the High Court held that the Full Court was correct to characterise the loss provision costs, regulatory capital costs and collection costs as affecting the legitimate interests of the ANZ.

"Nettle J, in dissent, would have allowed the appeal on the common law claim on the basis that the late fee was a penalty because it was grossly disproportionate to the greatest amount of damages that would be recoverable for the breach of the monthly payment obligation (Nettle J would have left the statutory appeal unadjudicated on the merits: see [375] and [376]). Contrary to the majority, Nettle J held the appropriate penalty test from Dunlop to have been of whether the agreed sum is ‘extravagant and unconscionable’ compared to the greatest loss that could conceivably be proved following a breach of the obligations (see [317]). Consequently, Nettle J saw the late fee as payable on a breach of the obligation to pay the monthly payment on time, and thus focused on the lateness of the payment rather than a failure to pay at all (at [338]). Following this approach, Nettle J held that the primary judge was correct to reject ANZ’s arguments that the late fee covered possible costs associated with bad or doubtful debts, increased regulatory capital and collections because to a very large extent those costs were not actually incurred (see at [349]–[369]). The total cost that might have been recoverable was at most $6.90 which was ‘extravagant or otherwise out of all proportion’ to the $35 (or the eventual $20 fee) that was charged, and thus the fee was a penalty (see at [371])."

* 20% on Purchases after expiry of an Interest Free Period which may be up to 55 days from the 'Purchase Date'; and

Mindful that the Cash Rate is only 1.5% and the interest meter is running at exceedingly high interest rates (listed above) after the expiry of the Interest Free Period (or immediately in the case of a Cash Advances), when contemporaneously a Late Payment Fee may also be levied, it is puzzling that only one of the five High Court judges in Paciocco & Anor v the ANZ Bank ruled that a Late Payment Fee is a 'penalty'.

(II.) Our competition is getting away with it, so why shouldn't we do it as well; and

History evidences that the Reserve Bank, with it's Extensive Powers and Responsibilities to ALL Australians, did not put up a fight back in 2002 to "....re-price credit card payment services to... be .....consistent with the approach adopted by Australian financial institutions in pricing other payment instruments under their control."

B. carries responsibilities to 'inter alia' "best contribute to.......... the economic prosperity and welfare of the people of Australia",

far beyond those of the USA central Bank or the UK Central Bank. Point 3 of 'Extensive Powers and Responsibilities of the RBA' evidences that the Reserve Bank has explicit obligations/responsibilities to Revolvers, whereas the U.S. Federal Reserve or the Bank of England do not..

IV. A separate consequence from a lack of competition due to The Four Pillars enjoying Oligopoly dominance

Looking beyond Credit Card Products, Chapter 12 explains that the Australian banking industry has consolidated substantially since Campbell recommended deregulation from 1980. The Four Pillars continue to announce record profits, but Australia's Three Regulators for Financial Services have not displayed any interest in whether any of the Four Pillars are exploiting their unique Oligopoly market conditions by not paying interest on transaction bank accounts, but rather often charging an account keeping fee $5p/m circa. When the Writer commenced working for CBA in 1970 a passbook account paid 3.75% pa interest. Banks' mainframe computer systems have materially reduced in cost since the legacy mainframe EDP systems of the '80's and 90s.

The Reserve bank provides a welter of statistical data reporting on Credit Cards and depositors' balances at Statistical Tables. Alas, that behemoth of numerical reporting provides negligible meaningful information about -

(i) which demographic cohorts are paying a disproportionate share of Credit Card delivery costs and profits; and

(ii) the quantum of funds held in zero interest paying bank accounts, and the component (for a particular month) that is charged a monthly fee of $5 or more.

In summary, the Four Pillars enjoy a unique competitive advantage that no other banks in the Western world benefit from.

The Writer beseeches you to enthuse the Labor Party to support meaningful assistance to almost 1,000,000 Credit Cardholders, that the Reserve Bank has identified as Persistent Revolvers, by supporting this request for a Royal Commission with only Two Terms Of Reference, because the evidence that the Writer recently provided to Maurice Blackburn (of Unconscionable Conduct and inept, painfully slow to regulate, and conflicted regulation - in 1. 2. and 3 of II. above) is substantial and material.

There may be merit in the Nick Xenophon Team seeking Maurice Blackburn's opinion and thoughts on that evidence.

Prior to posting this letter (in two DVDs and a USB stick) to you on 17 August 2017, the Writer posted a DRAFT of this letter to Mr. Julian Schimmel (who signed Maurice Blackburn response letter dated 14 July 2017) at Maurice Blackburn a week earlier on 9 August 2016 to put Julian Schimmel, in the loop, notably that -

(A) the Writer intended to approach a member of Parliament, albeit not his local member; and