Abigail spoke in opposition to the Government's latest attempt to railroad the experiences of vulnerable people. This Bill would effectively remove elements of consent from beneficiaries under trustees.
Ms ABIGAIL BOYD (20:40): The Greens oppose the Crimes Amendment (Corrupt Benefits for Trustees) Bill 2023, and I note my extreme concern with the way in which the Attorney General has brought the bill about. The Greens asked for a briefing and raised concerns; we were not given a briefing and those concerns were not dealt with. The Attorney General did not turn up to the upper House crossbench briefing this morning and, to my horror, it appears that he did not consult more broadly than with a relatively select group of corporate‑trustee‑focused folks across the legal and financial industries.
Unfortunately, the bill in front of us is a sledgehammer approach to fix a problem that could be fixed in a myriad of ways that would not have the unintended consequences that it is now likely to have. But because consultation did not occur with those lawyers who work for some of the most vulnerable beneficiaries, particularly under the NSW Trustee and Guardian [NSW TAG] scheme, we are now faced with a bill that is likely to actually strip them of significant protections.
Obviously, section 249E is problematic and, as the Hon. Susan Carter said, trusts are really old. When trusts were first brought into our law, as any good lawyer will know, they were brought in in a very different form to what they have now been used for. For my sins, I was a corporate lawyer and an investment banker in my previous career. I spent a lot of time working with trusts within the financial services industry, using them and structuring different types of products around them. I am very familiar with the loopholes and benefits that trusts can create for the financial services industry. But when we look at section 249E and particularly at the MLC case that really sparked the bill, as I understand from the second reading speech, there is an obvious problem when it comes to the need to seek consent from every single beneficiary of an incredibly large superannuation fund. No‑one is denying that, and the New South Wales provisions are significantly broader than those in Victoria and Queensland.
I really wish that we had had the opportunity to consider what an amendment would look like. Even if we just stripped back the provisions to match those in Victoria and Queensland while we considered the broader implications of changing the law so significantly for other types of non-large corporate trustees, that would have been a really good step forward. But unfortunately, the consultation that we would expect from a Labor Attorney General did not occur. The Greens absolutely agree that there is a problem and it needed to change. At the moment not just the large superannuation funds themselves but also anyone who was involved in past behaviour that could fall foul of that section come within the "aiding and abetting" liability. We do need to fix that, but let us look at what has actually been done under that provision.
If we take a step back and look at the NSW Trustee and Guardian and the investment rates and court discount rates, prior to the New South Wales Government adopting the NSW TAG fee cuts recommended by the Independent Pricing and Regulatory Tribunal that commenced on 1 July 2016, stakeholders and the NSW TAG argued that they were unsustainably low and would result in undercompensating injured people in New South Wales. That is quite complicated to understand, but my understanding is that, effectively, cutting the rates for NSW TAG fees results in more money coming out of a person's trust fund, or the amount that they are entitled to, if the fees of the trustee go up.
As predicted, investment fees have more than tripled from 1 January 2022 in response to the previous Government's change, and thus NSW TAG clients—children and people with brain injuries, for instance—are having to wear the increased costs. They are getting less than the original sum that they were granted by the court to compensate them for their injury or what have you, so they are not able to get what they need as readily as they would have otherwise, because of that change. Prior to the election, commitments were sought from all parties that they would identify that vulnerable cohort of NSW TAG personal injury clients—so those falling between 1 July 2016 and 1 January 2022—and take steps to protect their financial interests. In the lead-up to the election, those advocates were seeking a root‑and‑branch review of the NSW Trustee and Guardian and protection of the right of individuals to select their own private trustee.
My understanding is that rather than live up to the commitment that I understand Labor made to do that root‑and‑branch review of the NSW Trustee and Guardian, instead we have these kinds of ad hoc changes coming through. That is incredibly disturbing because the system is so in need of reform and so in need of a more holistic set of amendments that to now put something like this on top makes the situation even worse. Prior to the election, stakeholders raised particular concerns with Labor about large trustee companies swallowing up competition. It would be fabulous if we ended up with those really large trustee companies, with their benefit of size, somehow offering reduced fees, but that is not happening. With the greater consolidation of the market, we are getting increased fees. Yes, there are superannuation funds and everyone else, but there is also that incredibly vulnerable cohort of people who are reliant on trustees to provide for them. When their fees are raised, it is incredibly problematic.
The bill removes one of the barriers to one trustee providing inducements to move clients to another trustee. Whereas previously trustees would have to speak to the beneficiaries or go to the Supreme Court to get that consent, the bill removes the risk of a criminal charge for that. Instead, we have the concept of acting corruptly. There is a huge difference between trustees acting corruptly and doing stuff in their commercial interest that is not to the benefit of their beneficiaries. At the moment the Supreme Court will basically give consent on the basis that it is in the best interests of beneficiaries. That is being removed, and instead we only get concern and we only have any kind of offence provision if they have been shown to act corruptly.
That is a very different concept. It takes away yet another line of defence from really vulnerable people who rely on trustees not just to refrain from corrupt conduct but to actually do stuff that is in their best interests. That is the bit that the bill takes away, and that is why it is so heinous. I am very disappointed that that was not picked up by Labor. I do not think that the Attorney General sat there and thought to himself, "I really want to make things worse for these vulnerable people". But through the lack of consultation, through what I can only imagine is the arrogance of failing to even brief us and hear our concerns, this bill will really compound an already terrible system. Private trustee companies are known for charging very high fees. They manage the property of vulnerable people with limited transparency, and they are not subject to the consumer protections that apply for other consumers. For example, they do not need to provide clients with statements of advice. Private trustee companies avoided the scrutiny of the royal commission into misconduct in financial services, which is a great shame, because I think the royal commission would have uncovered a significant number of problems if it had had the time for that investigation.
The significant consolidation of private trustee companies has led to the likes of perpetual trustees and really large companies dominating the personal injury market in New South Wales. They have invested in house, their fees have been very high and they have purchased other trust companies and shifted those clients' investments into their own in-house products. This came to the attention of Justice Lindsay in the Supreme Court of New South Wales, and he required the perpetual trustee to consult with the families of clients without capacity to explain any fee changes and to confirm their consent to the change. That is great example of a case where the protection of those vulnerable people required the involvement of the Supreme Court.
We now have what is essentially a two-horse race in the personal injury market for trustee services. I would love it if these were benevolent institutions, but they are money-making institutions. It is not their fault; that is what they are set up for. They are there to make a profit, but their profit means that there is less for the people who rely on the money to deliver what they need for a good life after the injury or whatever else it was that led to compensation.
Personal injury lawyers in New South Wales were already concerned about the small number of trustee companies that could be appointed to manage the money of vulnerable people without capacity. In the recent past we have seen that the fees can go up and the service can go down very easily after a trustee company is appointed. Beneficiaries are not able to easily change trustees. They have to come back to the court, and that can be expensive. If their trustees are changed without their consent being sought, it is very hard for the beneficiaries to change that again. They have to seek the approval of the current trustee for the funds to engage a lawyer to remove that same trustee, so there is a natural conflict of interest there. We have heard of that request being denied quite a lot, because it is not in the interests of those profit-taking companies. Trustee companies use their own lawyers, then engage external lawyers to resist being removed once they are appointed. Again, it is really vital that the protections for beneficiaries are not wound back.
The bill would place more vulnerable beneficiaries at significant risk. Corporate greed or "it is just the way of business" is driving the buying and selling of clients. Beneficiaries of trusts are a sort of commodity that can be passed around. That should not be allowed in the trustee space, where it is impacting on the most vulnerable people in New South Wales—people whom the Labor Party had already acknowledged, prior to the election, were in dire need of reforms to the system. The bill basically removes the mass movement of clients in large trustee companies from the scrutiny of the protective division of the Supreme Court, which is completely contrary to the opinion of Justice Lindsay in the perpetual case that I mentioned earlier.
It is just extraordinary that we have reached this point and that we have such a terrible bill before us. I am going to give the Attorney General the benefit of the doubt—I do not believe it was intended. But this is lazy drafting, and it is drafting without consultation. I have heard that "this brings it into line with the rest of part 4A", but part 4A is to do with agents and principals. This is about trustees. This is about the last line of defence for incredibly vulnerable people who are seeing their money dwindle away under really high fees. Under the bill these "good faith" or "business as usual" or whatever you want to call them transactions will be allowed to occur between trustee companies without the consent of the incredibly vulnerable beneficiaries. That is a massive step backwards.
Again, I am incredibly disappointed that this is what we get from this Labor Government. I really hope that members reconsider. I understand that other parties are not keen to join me in opposing the bill, but I would ask that the Labor Government recommit to reviewing the trustee and guardian system, because the trauma and the absolutely devastating effect that it is having on vulnerable people across New South Wales is just shameful. The Greens oppose the bill.