Tomorrow marks one year since Commissioner Kenneth Hayne submitted the Banking Royal Commission Final Report. The Government has taken big steps towards cleaning up the finance sector, but consumer advocates stress the danger of industry continuing to push back against much needed reforms.
Consumer Advocates say that Hayne’s vision needs to be fully implemented without watering down by industry in order to improve the lives of Australians and our communities.
The finance industry is showing some promising signs of change since the Royal Commission. Consumer advocates point to the fact that some banks are automatically transitioning people to basic bank accounts, with no or low fees, which is saving people on very low incomes millions of dollars in bank fees.
However, they say the threat of industry pushback still looms, as we’ve already seen with a backflip on banning harmful commissions in the mortgage broking industry. There’s a risk insurers, car dealers and other industry players will lobby against the sensible reforms recommended by Hayne.
To its credit, the Government has held firm on the majority of the recommendations and is diligently progressing legislation to implement much needed change. However, with Parliament resuming shortly, there is no doubt that industry will be trawling the corridors in Canberra running scaremongering campaigns.
Commissioner Hayne found that greed and a focus on sales and profits drove significant misconduct. This will continue unless the Government and regulators take a firm stance against misconduct and regulatory loopholes.
These reforms will only work if they honour the spirit, and not just the letter, of Hayne’s recommendations. At the end of this bumper crop of legislative reform, the Government must ensure there are no gaps and loopholes.
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- Some banks automatically transitioning people on low incomes to no or low fee accounts
- Legislation will soon be introduced that will remove unfair contract terms from insurance, remove exemptions for funeral expenses policies and introduce a best interests duty for mortgage brokers
- The regulators are enforcing the law and prosecuting misconduct in the industry
- Government backflipped on banning harmful upfront and trail commissions in the mortgage broking industry
- Government hasn’t yet provided greater funding for community lawyers helping victims of banking misconduct
- The banking industry continue to be plagued in scandal. Westpac has been mired in controversy with the AUSTRAC money laundering scandal. AMP was caught charging fees to dead people.
Gerard Brody, CEO Consumer Action Law Centre
- “When it comes to the Royal Commission, the proof will be in the pudding. While promising progress has been made, we’re still waiting for the Government to introduce a number of reforms. The overall impact of the Royal Commission has been positive, but we remain cautious of the risks that industry lobbying could undermine the spirit of Hayne’s recommendations.”
- “One glaring gap has been the Government’s failure to respond to Hayne’s commentary about greater need for legal assistance services. At Consumer Action, we’ve had a 170% increase in people contacting us for legal assistance, which is demand we simply can’t meet with current resources. More investment is needed to ensure people can get access to justice.”
Karen Cox, CEO, Financial Rights Legal Centre
- “Commissioner Hayne argued not just for legislative change but for cultural change. While much is happening on the legislative front there seems to be less movement on the cultural front. Yes, many firms are being more responsive to complaints and settling disputes but we still hear from callers with appalling claims handling practices, poor communications, and unfair contract terms. Culture may be difficult to change but the sector needs to take steps now to meet consumer expectations.”
Fiona Guthrie, CEO Financial Counselling Australia
- “Commissioner Hayne recommended lots of law reform. But he also recognised that just changing the laws won’t be enough. A fundamental cause of the problems we saw in the Royal Commission was a failure of culture and ethics. As Commissioner Hayne stated, industry needs to follow some basic norms of behaviour, one of which is to “be fair”.
- “Applying a fairness lens to everything financial service providers do will go a long way to restoring trust with all Australians.”
Erin Turner, Director – Campaigns and Communications, CHOICE
- “One year on from the Royal Commission and it’s clear the big banks and financial institutions have a lot more work to do. From the shocking Westpac money-laundering scandal to AMP continuing to charge fees to dead people, it’s clear the industry still hasn’t committed to the most basic tenet: to treat their customers fairly.”
- “The next six months will define the Government’s legacy in response to the Royal Commission. The Government has committed to acting on 28 of the Royal Commission’s 76 reforms by June of this year. We urge the Treasurer Josh Frydenberg to act on his commitment and pass these lasting reforms without loopholes that we know industry will lobby for.”