One step forward, two steps back: Banking Royal Commission reforms welcomed but deep concerns remain
Consumer groups* have strongly welcomed the introduction of a Bill today in Parliament to prevent hard-sell tactics for insurance and other financial products.
The Bill introduces some of the 76 long-awaited reforms to strengthen Australian’s consumers rights recommended by the Banking Royal Commission.
“These reforms target hard-sell tactics for insurance after heart-wrenching stories were uncovered by the Banking Royal Commission,” said Gerard Brody, CEO of Consumer Action.
“Cold-calling people to sell low-value insurance or bundling junk products in a hard sell should now be stamped out. We congratulate the Federal Government for progressing stronger consumer protections.
“At the same time, we have concerns about a potential exemption for travel insurance from some of the insurance reforms. This would leave people open to unscrupulous sales tactics and being sold unsuitable travel insurance, cementing the problems we saw in travel insurance during the COVID crisis.
“Commissioner Hayne recommended ‘industry-wide’ reform as well as abolishing exemptions and loopholes. After a massive spike in travel insurance complaints during the COVID-19 crisis, any exemptions should be time limited and for good-value products only,” said Mr Brody.
“This is a good start to implementing the Hayne Reforms. We now need to see the enactment of the entire reform package as promised by the Morrison Government in response to the Banking Royal Commission’s final report,” he said.
“Unfortunately, we have seen the Government backflipping on some of their Banking Royal Commission commitments already. In particular, the proposed scrapping of responsible lending protections would directly contravene the very first recommendation by Commissioner Hayne. Reducing consumer protection in lending makes no sense ethically, morally, or economically. It will risk explosive debt and more suffering among our most vulnerable,” said Mr Brody.
”Today is another positive step towards making sure banks and financial institutions are held to account. We welcome the Government’s introduction of key Banking Royal Commission recommendations into Parliament,” said Alan Kirkland, CEO of CHOICE.
“This is just the next step in a long process. There are still some critical reforms to come in further legislation next year.
“In this context, it is astonishing that the Government is proposing to axe safe lending laws. The work of implementing the Banking Royal Commission recommendations is far from done, yet the Government is proposing to repudiate the Banking Royal Commission’s first recommendation – that safe lending laws should not be amended.”
ENDS
*Consumer Action, CHOICE, Financial Rights Legal Centre, Financial Counselling Australia
Media contact:
Mark Pearce, Media and Communications Adviser,
Tel: 0413 299 567, mark@consumeraction.org.au
