Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697646499351.pdf (Australia)
Michael Clifton Watson 07.07.2020 Senate Standing Committees on Economics PO Box 6100 Parliament House Canberra Canberra ACT 2600 Dear Committee Secretary and Senators Inquiry into the Banking Amendment (Deposits) Bill 2020 I write to support the Bill being introduced by Senator Roberts.

The most important aspect of my submission in support of the Bill is to remove the doubts regarding the use of deposits to refinance a bank in the event that their poor business judgements lead to financial fail ure.
The passing of the Financial Sector Legislation (Crisis Resolution Powers and Other Measures) Act 2018 does not specifically exclude deposits from any provision to utilise various instruments to refinance a failing bank.

This process is known as 'bail in'.

Various instruments are not clearly defined and there is therefore doubt as to whether or not deposits are included.

The Prime Minister has stated that there is no intention to include deposits in any 'bail in' provision.
However this is a verbal assurance and cannot be relied upon.

The Banking Amendment (Deposits) Bill 2020 would guarantee in legislation that there is no intention to include deposits in any 'bail in'.

Verbal agreements and assurances are not adequate and are meaningless.

It is essential that deposits are excluded from any 'bail in' provisions and this should be clearly stated so as to remove any doubt in the minds of depositors.
The Banking Amendment (Deposits) Bill 2020 Bill will give this reassurance and remove any doubt.

The fact that deposits are not specifically excluded in Financial Sector Legislation (Crisis Resolution Powers and Other Measures) Act 2018 indicates that APRA and the government do indeed intend to 'bail in' deposits in the event of a bank failure.
Under current legislation in the event of 'bail in' the number of citizen, business and superannuation deposits would be enormous and the repercussions would be destructive to individuals, business and the economy.

Banking Amendment (Deposits) Bill 2020Submission 156 If the government does not support this Bill as presented by Senator Roberts there is only one conclusion.

APRA and the government have every intention to include deposits in any ‘bail in’ provisions.
Prior to becoming Prime Minister, Treasurer Morrison stated that “the government retains discretion to activate the Financial Claims Scheme (FCS) when an institution fails”.

It has been demonstrated since then that the FCS is not currently in force and will only be activated in the event of a Financial Institution failure.

Most Australian bank websites state that an amount of $250,000 is protected by the FCS in the event of bank failure.
This is untrue as the FCS is not currently active and can potentially be activated by APRA in the event of bank stress or failure.

As a self funded retiree with considerable cash in Australian banks I have no trust in my deposits being protected in the event of a bank failure.

This doubt must be removed and the Banking Amendment (Deposits) Bill 2020 will remove doubt and clarify that deposits will not be one of the financial instruments to be utilised in ‘bail in’.
Kind Regards Michael Clifton Watson Banking Amendment (Deposits) Bill 2020Submission 156