Banking Royal Commission reforms: “Pivotal moment in implementing Hayne’s vision”

Banking and Finance, Media Release

Consumer Credit Legal Service (WA), CHOICE, Consumer Action Law Centre, Financial
Counselling Australia, Financial Rights Legal Centre and Super Consumers Australia have
today published policy submissions that respond to 22 of the Royal Commission’s 76
recommendations.

 

Full consumer group submissions available on Dropbox [here]

 

After the shocking scandals of the Royal Commission, consumer groups are supportive of the Treasurer Josh Frydenberg’s efforts to enact recommendations but have warned about the risks of allowing loopholes and exemptions in the new laws.

 

“This is a pivotal moment in implementing Commissioner Hayne’s vision. If passed without loopholes or carve-outs, these laws will be an important step towards embedding greater fairness in the system, ensuring that the financial wellbeing of customers is truly prioritised” says CHOICE CEO Alan Kirkland.

 

“No longer will insurers and their retailing partners be able to flog junk insurance through harmful unsolicited and add-on sales practices,” says Gerard Brody, CEO of Consumer Action.

 

“The desire of large companies to continue cross-selling insurance to their marketing lists isn’t a basis for an exemption from these critical reforms.”
“ASIC’s new powers means the regulator will now have the power to ensure people who have been ripped off are effectively compensated, which is a long overdue and much-needed reform” says Brody.

 

“The need for financial counsellors in Australia is growing, not shrinking. The Banking Royal Commission showed just how badly reform is needed and it’s great to see the recommendations being acted on as a priority. We don’t want to be back here in ten years. Fix it now. do it properly and make sure Australians have access to financial counselling support” says Fiona Guthrie,CEO of Financial Counselling Australia

 

“Reform of insurance regulation is long overdue. From shifting the onus back on to insurers to ask policyholders the right disclosure questions and limiting life insurers ability to avoid contracts, to regulating the sale of junk insurance products and ending the damage wrought by unsolicited selling, the time has come for the insurance sector to clean up its act” says Karen Cox, CEO of Financial Rights.

 

“These reforms will protect people from having their retirement savings eaten away by ‘fees for no service’. If passed, stronger laws will also empower ASIC and APRA to stamp out unfair behaviour by superannuation funds” says Xavier O’Halloran, Director of Super Consumers Australia.

 

“These reforms address systemic conduct that has continued to harm consumers since the Royal Commission. We are pleased to support the WA consumer voice in responding to the draft legislation” says Gemma Mitchell, Managing Solicitor of Consumer Credit Legal Service (WA).

 

Royal Commission recommendation Submission Organisation leading
reform and available for
comment
Recommendation 1.15 – Enforceability of financial services industry codes Read submission here Financial Rights
Recommendations 1.6, 2.7, 2.8, 2.9 and 7.2 Strengthening breach reporting Read submission here CHOICE
Recommendations 2.1 and 2.2 – Ongoing fee arrangements in financial advice and disclosure of lack of independence Read submission here CHOICE
Recommendation 3.1: Trustees of Registrable Superannuation Entities (RSE) should hold no other role or office Read submission here Super Consumers Australia
Recommendations 3.2 and 3.3 – Advice fees in superannuation Read submission here Super Consumers Australia
Recommendation 3.4 and 4.1 – No hawking of superannuation and insurance products Read submission here Consumer Action and Super Consumers Australia
Recommendation 3.8, 6.3, 6.4 and 6.5 – Superannuation regulator roles Read submission here Super Consumers Australia
Additional commitment in response to recommendation 4.2 – restricting use of the term ‘Insurance’ and ‘Insurer’ Read submission here Financial Rights
Recommendation 4.3 – Deferred sales model for add-on insurance Read submission here Consumer Action
Recommendation 4.4 – Cap on vehicle dealer commissions Read submission here Consumer Action
Recommendation 4.5 – Duty to take reasonable care not to make a misrepresentation to an insurer Read submission here Financial Rights
Recommendation 4.6 – Limiting avoidance of life insurance contracts Read submission here Financial Rights
Recommendation 6.14 – Financial Regulator Assessment Authority Read submission here CHOICE
Additional commitment in response to recommendation 7.2 – ASIC directions power Read submission here Consumer Action
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