A Treasury official yesterday told a parliamentary committee that the department “canvassed a number of people” to lead the inquiry into payments regulation but said it was Treasurer Josh Frydenberg’s decision to appoint King & Wood Mallesons partner Scott Farrell to the role.
Farrell’s appointment has come under public scrutiny since November last year because the inquiry’s terms of reference require him to assess specific matters relating to at least one of his law firm’s clients - NPP Australia.
The perceived conflict of interest could be a deep one for Farrell because he is the head of KWM’s national fintech practice, which counts NPP Australia as a major client.
During a hearing on Tuesday of the parliamentary committee reviewing digital payments, NSW Labor Senator Deborah O’Neill grilled senior Treasury official Ms Nghi Luu about the process that led to Farrell’s appointment.
Senator O’Neill: Who appointed Mr Farrell to the job?
Luu: The Treasurer.
O’Neill: Was it a competitive process?
Luu: Yes we canvassed a number of people we thought would be ideal to lead that review.
O’Neill: Did you make recommendations to the Treasurer from a panel of possible people or was Mr Farrell the one that you were told to make sure got the job?
Luu: We provided advice to government on who we thought should lead the review.
In response to written questions from Banking Day in November last year about Farrell’s conflict, the Treasury department said the government was “satisfied” he could manage any real or perceived conflict of interest.
“As per the standard appointment process Mr Farrell declared any real or perceived conflicts of interest through a private interests declaration,” a Treasury spokesperson said at the time.
“The Government is satisfied that Mr Farrell has sufficient processes in place to manage any real or perceived conflicts of interest.”
However, in May this year several shareholders of Sydney fintech Controlabill called for Farrell to resign his position as independent chair of the Treasury’s regulatory review because of KWM’s relationship with NPP Australia.
“KWM works for NPPA,” Controlabill told the Australian Competition and Consumer Commission.
Ms Luu was also quizzed about the status of Farrell’s final report, which has not yet been released to the public.
While she confirmed that it had been delivered to the government on 1 June, Luu declined to furnish any details about Farrell’s recommendations.
Senator O’Neill’s grilling of the Treasury official came after other members of the joint parliamentary committee aired concerns about the complexity of regulation of payments providers in Australia, which is currently shared between the Reserve Bank, ASIC, APRA and the ACCC.
Committee chairman Queensland coalition MP Andrew Wallace said the overlapping responsibilities of the regulators meant that new payments players such as Apple and Google had slipped through gaps in the framework.
He and other members of the committee expressed frustration with senior officials from APRA and ASIC being unable to clarify how they intended to regulate the payments activities of the global tech companies.
“What concerns me is we’ve got so many different regulators in this space,” Wallace said.
“Everyone (the regulators) seem to be looking at each other