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“The job is not yet done”: Banking Royal Commission implementation

Consumer groups respond to the two year anniversary of the Hayne Banking Royal Commission Final Report’s public release.

“People expect tough action to be taken on the Banking Royal Commission recommendations. We commend the government on its work to date, including banning grandfathered commissions and the introduction of a best interests duty for mortgage brokers,” says CHOICE CEO Alan Kirkland.

“What the government does with the remaining recommendations will determine whether that year of Royal Commission hearings was worth it, or whether we’ll just allow the banking sector to slip back to bad old ways.”

“Landmark reforms including the Financial Accountability Regime are due to be implemented this year. One of the powerful lessons of the Royal Commission is the failure of executives and senior managers to be held to account when they break the law.”

Polling conducted in November 2020 found that 81% of Australians think there should be stronger laws that hold senior financial executives to account (1).

“A new Financial Accountability Regime with strong individual penalties will bring greater personal accountability to the financial system. There’s no point introducing an accountability regime unless it’s a tough one,” says Mr Kirkland.

Quotes attributable to Gerard Brody, CEO of Consumer Action Law Centre

“Some improvements to consumer protection have been enacted, particularly in areas like the sale of junk add-on financial products and cold-calling—although industry are already seeking carve outs and exemptions. All outstanding recommendations need to be prioritised to ensure people are not left out-of-pocket.”

“We need a well-funded and broad-ranging Compensation Scheme of Last Resort to ensure victims of financial sector misconduct get paid fair compensation if the firm goes bust. The community won’t trust the finance sector unless they know that they will be remedied if something goes wrong, that’s why this overdue reform needs to be implemented as a priority.”

Polling conducted in November 2020 found that 82% of Australians think there should be compensation for people when they are wronged by financial institutions(1).

Quotes attributable to Karen Cox, CEO of Financial Rights Legal Centre

Financial Rights Chief Executive Officer Karen Cox said removing Australia’s responsible lending laws would give borrowers access to credit they simply cannot afford, with lenders facing no penalties for failing to lend responsibly.

It would remove the right for borrowers to take legal action against lenders.

“The Hayne Commission couldn’t have been clearer – responsible lending laws need to stay in place,” Ms Cox said.

“When I was called as the first witness to the Commission almost three years ago I recalled how thousands of people reached out to Financial Rights for help to solve problems with unsustainable debt.

“We all hoped the Royal Commission would lead to improved experiences for customers and fewer people overloaded with staggering credit they cannot afford. The Australian Government has clearly forgotten the plight of these people.

“The fact is household levels of debt in Australia are still among the highest in the world. New home loan commitments reached record highs in December 2020. The Government’s proposal to axe safe lending in order to let credit flow more freely is illogical and economically irresponsible.”

Quotes attributable to Fional Guthrie, CEO of Financial Counselling Australia

“The Royal Commission has changed the financial services industry for the better. But we’ll be back here in a few years’ time if the industry forgets the lessons, returning to the bad old days of loopholes and profit before people.”

“The financial counselling sector is also very grateful that the Government took note of Commissioner Hayne’s comments about the power imbalance between consumers and financial services providers and the need for predictable and stable funding for financial counselling as a way to redress those imbalances.

The subsequent review of the funding for financial counselling conducted by Louise Sylvan AM, recommended that industry contribute to funding, and this policy reform is now being explored.

“Financial counsellors however are incredibly concerned that the Government is proposing to wind back the responsible lending laws, contrary to the first recommendation of the Royal Commission.

Our survey of the sector found that 97% of financial counsellors think the laws should stay.

The overwhelming majority of financial counsellors (93%) say they use the laws to help their clients.”

Notes:

[1] Polling was completed as part of the Dynata’s weekly “Omnipulse” omnibus.The fieldwork was conducted on 11-16 November, 2020. 1,014 people completed the survey and data was weighed to the latest ABS census data so results are nationally representative.

[2] Financial Counselling Australia’s Safe Safe Lending report was released on Monday 1 February. The report surveyed 235 financial counsellors.