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Consumer groups comment on Banking Royal Commission reforms

Consumer groups welcome today’s passage of Royal Commission recommendations into law, but condemn the government for introducing the law to axe safe lending laws into the House.

“This week the government has proposed to slightly strengthen and at the same time significantly weaken consumer protections in the finance sector. Overall, consumers will be worse off if the government goes ahead with its plans, which is not what the Royal Commission intended,” says CHOICE CEO Alan Kirkland.

Consumer Action Law Centre (Consumer Action), CHOICE, Financial Counselling Australia and Financial Rights Legal Centre (Financial Rights) welcome the passage of the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 as an important step forward that will help to curb the significant harm that has been fueled by industries who have put sales ahead of people.

However, the government has introduced legislation into the House of Representatives to weaken lending consumer protections that goes against the very first recommendation of the Hayne Royal Commission.

“It’s clear that the Australian community expects the government to act on their commitment to legislate Royal Commission reforms,” says Mr Kirkland.

“However, we are dismayed that the government is still going ahead with their plan to dismantle the very first recommendation of the Banking Royal Commission: to enforce safe lending laws. In 2021, Federal Senators will have a chance to play an important role in blocking this law and protecting people against this harmful legislation. Axing safe lending laws will lead to a debt disaster,” says Mr Kirkland.

Financial Counselling Australia CEO Fiona Guthrie welcomes the reforms, but expresses concern about the impact of axing safe lending laws on the Australian community.

“While financial counsellors are pleased to see that the Government is implementing many of the recommendations of the Royal Commission, we are dismayed that the very first recommendation about the responsible lending laws is being ignored,” says Ms Guthrie.

“Commissioner Hayne said that the responsible lending laws did not need to change. Instead, the Government is planning on dismantling them. This will be a disaster for individuals, families and the economy.”

Financial Rights Chief Executive Officer Karen Cox said this tranche of Royal Commission bill introduces important and long overdue reforms to the insurance industry that will lift standards of practice and benefit consumers.

“A significant percentage of complaints to Financial Rights Insurance Law Service concerns basic claims handling issues such as delays, unfair reliance on exclusions, refusal to supply copies of evidence relied on, and fishing expeditions seeking unreasonable and sometimes irrelevant evidence from their customers

“These longstanding problems have festered because regulators have been unable to oversee these activities. We believe the Royal Commission reforms will lead to better practices and fewer complaints,” she said.

“After supporting people to share heart-wrenching stories with the Banking Royal Commission, and empowering people to demand over $26 million in refunds for junk insurance, Consumer Action knows the harm caused by pressure selling. No-one should be flogged insurance in a cold call or snuck into paperwork when buying a car, home loan or flight.  We congratulate the Federal Government for passing stronger consumer protections that should stamp out hard-sell tactics in insurance,” says Gerard Brody, CEO of Consumer Action Law Centre.

“However, Commissioner Hayne recommended ‘industry-wide’ reform and abolishing exemptions and loopholes – we hope the Government doesn’t undo its good work through carve outs and exemptions for travel insurance”.




Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 and Corporations (Fees) Amendment (Hayne Royal Commission Response) Bill 2020 addresses the following Royal Commission recommendations:

  • Enforceable code provisions (recommendation 1.15)
  • Insurer avoidance of life insurance contracts, and duty to take reasonable care not to make a misrepresentation (recommendations 4.6 and 4.5)
  • Deferred sales model for add-on insurance  (recommendation 4.3)
  • Caps on commissions (recommendation 4.4)
  • Hawking of financial products (recommendations 3.4 and 4.1)
  • Use of terms “insurance” and “insurer” (additional commitment in response to recommendation 4.2)
  • Claims handling and settling services (recommendation 4.8)
  • Trustees of registrable superannuation entities should have no other duty (recommendation 3.1)
  • Adjustment of APRA and ASIC’s roles in superannuation (recommendations 3.8, 6.3, 6.4 and 6.5
  • Reference Checking and Information Sharing Protocol (recommendations 1.6 and 2.7)
  • Breach reporting and remediation (recommendations 1.6, 2.8 and 7.2)
  • Statutory obligation to cooperate (recommendation 6.9)
  • Formalising ASIC meeting procedures (recommendation 6.11)


Media contact: Mark Pearce, Media and Communications Adviser, 0413 299 567,

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