The final report from the Banking Royal Commission has been released, and it makes interesting reading. Here is a brief summary of the 950 pages. More to follow.
At the high level, the greed driven attitudes of the industry are highlighted as leading to the poor practice and illegal behaviour. This was driven by high pressure sales tactics. As a result the community trust in the financial sector has been lost. Change is needed – and culture of the entities and their boards are at the heart of it.
Consumers must be treated honestly and fairly.
The Treasurer says it was a scathing assessment driven by greed and poor behaviour. The price paid was financial, but also hitting people directly. Trust needs to be restored, whilst keeping competition, and the flow of credit.
Consumers will benefit from better protection. It will raise accountability and governance, enhance regulation, and provide for effective remediation.
It does not remove the twin peaks model, (APRA and ASIC).
More than 20 referrals to the regulators for criminal charges. No individuals were named.
The report has 76 Recommendations covering a wide range of issues. The Government says its will “take action” on them all. (Does not mean full implementation).
Of note is the establishment of a new super regulator to sit across APRA and ASIC to gauge their effectiveness and clarify roles and responsibilities. The Federal Court will have extra responses to progress the referrals.
Mortgage brokers will have a best interests duty and trailing commission will be banned in due course (July 2020). In addition there is a recommendation to move to fee for service paid by customers though the Government is slowing any such change (a 3 year review in the view of the impact of competition).
There will be one account for new superannuation savers and fees to be banned from My Super accounts. Changes to the add on to insurance via a cooling off period.
A Compensation scheme of last resort.
Expansion of the BEAR cultural framework.
No changes to responsible lending – its all about policing and compliance.
Nothing on structural separation, or horizontal or vertical integration. So the industry structure remains untouched.
The legislative response seems muted, and delayed to kick the burden down the track, after the election.
So my take is some progress, but not as much as perhaps many will wish for….
The recommendations are a very light slap on the wrist at best. This is why both major parties are so happy to action all recommendations. It’s easy for them to take action without stepping on banker’s toes. It’s a win-win (for the bankers and politicians only I mean). The general public don’t count and don’t matter to either bankers or politicians. I thought everyone knew this already?