Direct Vanqex
Related Articles
A motivational speaker with more than 20,000 likes on Facebook has claimed an Australian law introduced in 2018 allows the federal government to “empty your bank account” of deposits of more than $250,000 in the event of a financial crisis.
This is not the first time such claims have been made. A similar argument was made by a minor-party senator who proposed a 2020 law change to stop “failed banks from taking our money.” However, a parliamentary committee that looked into the matter found that there were already legal protections for bank deposits and that the change was not necessary. Finance law experts have also said AAP Fact Check the allegation is “confusing”, “extreme” and a strained reading of the legislation.
The claim is made by Espen Hjalmby in a video on his Facebook account on February 24. In the video (mark 2min 30sec) he tells his Google followers “Bail in law 2018 Australia”. Entering this phrase into a Google search brings up as the first result a link to a webpage of a fringe political organization, the Australian Citizens Party. The webpage refers to a piece of legislation, the Financial Sector Law (Crisis Resolution Powers and Other Measures) Amendment Bill 2017 which became law in March 2018.
After 2min 55sec, Hjalmby says in reference to the federal parliament: “They slipped in a new law, slipped it through the back door with some of the people who voted it awake and voted it, the others slept…a law that says the government has the legal right to drain your bank account of anything over $250,000.
Hjalmby’s assertion mirrors the language used by the Australian Citizens Party (formerly known as the Citizens Electoral Council) and One Nation Senator Malcolm Roberts – the politician who pushed for the 2020 amendment – in arguments that the 2018 legislation allows failing banks to withdraw money from deposit accounts to maintain stability in the event of a financial crisis.
The basis for Hjalmby’s claim that the law was “swept in” while some parliamentarians were awake and others asleep is unclear. The final reading and voting on the legislation took place around lunchtime, 12:30 p.m. on February 14, 2018.
As explained in this ABC News report, the “bail-in” Hjalmby refers to is the opposite of a government bailout of banks during a financial crisis. Where a bailout refers to the government guaranteeing Australians’ bank deposits, a bailout refers to a scenario in which the bank bolsters its financial survival by taking deposits and exchanging them for equity.
In February 2020, Senator Roberts introduced the Banking (Deposits) Amendment Bill 2020 to Parliament. The bill was intended to “prevent financially troubled banks from stealing our savings”, according to its press release, by amending the Financial Sector (Crisis Resolution Powers and Other Measures) Amendment Bill 2017. . But a Senate committee investigation into Senator Roberts’ bill, after taking advice from the Federal Treasury and Australia’s Prudential Regulation Authority, dismissed concerns that customer deposit accounts of banks could be subject to any type of bailout or delisting in the event of a financial crisis.
In its final opinion, the committee said: “The committee agrees with the advice of the Treasury and APRA that the explicit protection of deposits in the banking law – the objects clause, priority reimbursement and the Financial Claims Program – is inconsistent with a concern filing. accounts could be subject to any type of conversion, write-off or bail-in.
Legal experts said AAP Fact Check there is no truth in Hjalmby’s assertion.
Associate Professor Andrew Godwin, of the University of Melbourne, said the legislation allowed APRA to order the compulsory conversion of certain types of “hybrid securities” into shares of the bank, and the argument was whether this could extend to bank deposits.
“In my opinion, this is a stretched interpretation because bank deposits up to $250,000 are guaranteed under the deposit guarantee scheme that the government introduced during the global financial crisis,” he said. he said in an email.
Dr Godwin said the target of bail-in power is hybrid securities, such as contingent convertible bonds, which are issued by banks to investors knowing they are subject to bail-in.
“Those who claim the legislation is ambiguous say that the reference to ‘hybrid securities and other instruments’ could encompass bank deposits. While there may be legitimate arguments as to the technical meaning of ‘instruments’, I think it is an overstatement to interpret the legislation in this way,” he said.
Professor Ross Philip Buckley of UNSW Scientia, School of Law and Justice, said AAP Fact Check the Australian government could not order the conversion of the people’s bank deposits into shares.
“An extreme and forced reading of a sentence in the Financial Sector (Cth) Amendment Act 2018 (Crisis Resolution Powers and Other Measures) could lead to this result, but it is not a reading that an Australian court would adopt,” he said in an email.
Associate Professor Will Bateman, an ANU legal expert, said the claim had “no truth”.
“There is no truth in the social media influencer’s statement about the use of regulatory powers to ‘bail out’ deposit accounts at Australian banks,” Dr Bateman said in an email. .
“Australia has a deposit insurance scheme under which the government agrees to insure the contents of deposit accounts up to $250,000/customer/ADI in the unlikely event of bank failure. This system is called the Financial Claims Scheme. Australia’s banking regulator, APRA, has a legal duty (s12, Banking Act 1959 (Cth)) to protect depositors, which would prevent the use of ‘bail-in’ powers in relation to deposit accounts.
Dr Bateman said Australia also has constitutional protections that prevent the government from acquiring property, including deposit accounts without providing “just terms” or compensation, under Section 51 ( xxix) of the Constitution.
“These protections prevent the situation described by the influencer from happening in Australia,” he said.
The verdict
The claims made by Hjalmby mirror similar claims made by One Nation Senator Malcolm Roberts and in submissions from a minor political group, the Australian Citizens Party. A Senate committee investigated concerns that the 2018 legislation meant bank deposits could be subject to “bail-in” and concluded that existing laws protected deposits. Financial law experts have also dismissed the claims, describing them as ‘confusing’ and an ‘extreme and tense’ reading of legislation that no Australian court would pass.
False – The request is incorrect.
* AAP Fact Check is an accredited member of the International Fact-Checking Network. To keep up with our latest fact checks, follow us on Facebook, Twitter and Instagram.
All information, text and images included on the AAP websites are for personal use only and may not be rewritten, copied, resold or redistributed, framed, linked, shared on social media or otherwise used, whether for remuneration of any kind or not, unless you have the prior written authorization of AAP. For more information, please see our terms and conditions.
