It’s time to give regulators the resources and powers they need and stop finance executives pocketing bonuses for rip offs, according to Consumer Action Law Centre in its response to the Royal Commission’s Interim Report and Insurance round today.
The consumer group said that the Federal Government had to step up to address the long-standing systemic issues exposed by the Royal Commission. Successive governments have failed to pull the big banks and insurers into line to ensure Australians get a fair go.
It is clear from the case studies examined by the Commission that leaving it to industry to self-regulate has failed miserably.
Enhanced consumer protection in the financial services sector is desperately needed to keep big banks and insurers honest. Protections recommended by Consumer Action in our response to the Interim Report and insurance policy issues include:
- Reducing loopholes in the law, such as extending the ban on conflicted remuneration to all credit and financial products and applying the prohibition on unfair contract terms to insurance;
- Requiring insurance and loans to be suitable for the consumer;
- Prohibiting unsolicited sales of financial products, including insurance;
- Providing borrowers with a right to debt waivers when a bank breaks responsible lending laws;
- Reducing excessive default fees;
- Providing more powers and resources to the financial regulator ASIC;
- Supporting victims by increasing investment in legal and financial counselling services.
Any reform to the sector must consider the ultimate social purpose of banking and finance. This means promoting the financial wellbeing of all Australians, not just boosting profit margins.
Quotes attributable to Gerard Brody, CEO, Consumer Action Law Centre
“Promises to do better by the industry are not going to cut it with Australians. We need decisive Government action to respond to the outrageous misconduct uncovered by the Royal Commission.”
“Some banks are removing sales targets from front-line staff, but unless Senior Management and Executives are stripped of their conflicted bonus payments, profits will still come before people.”
“Australia must invest more resources immediately in financial counselling and legal support if victims are to see justice when ripped off by a bank or insurer. The demand for these services far outstrips the current provision, and this must change.”
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