Politics

Government releases timetable for banking royal commission recommendations, following criticism it is ‘dragging its feet’

Michelle Grattan /

growth fund

Treasurer Josh Frydenberg speaks to the media during a visit to APT Advanced Manufacturing in Melbourne, Wednesday, November 14, 2018. Source: AAP/Stefan Postles.

Treasurer Josh Frydenberg has issued a timetable for the government’s dealing with the recommendations from the royal commission into banking, superannuation and financial services, which aims to have all measures needing legislation introduced by the end of next year.

The opposition has accused the government of dragging its feet on putting into effect the results of the inquiry, which delivered its final report early this year.

“The need for change is undeniable, and the community expects that the government response to the royal commission will be implemented swiftly,” Frydenberg said in a statement on the timetable.

Fydenberg said in his final report, commissioner Kenneth Hayne made 76 recommendations — 54 directed to the federal government (more than 40 of them needing legislation), 12 to the regulators, and 10 to the industry. Beyond the 76 recommendations, the government had announced another 18 commitments to address issues in the report.

The government had implemented 15 of the commitments it outlined in responding to the report, Frydenberg said. This included eight out of the 54 recommendations, and seven of the 18 additional commitments the government made. “Significant progress” had been made on another five recommendations, with draft legislation in parliament or out for comment or consultation papers produced.

Frydenberg said that, excluding the reviews to be conducted in 2022, his timetable was:

  • By the end of 2019, more than 20 commitments (about a third of the government’s commitments) would have been implemented or have legislation in parliament;
  • By mid-2020, more than 50 commitments would have been implemented or be before parliament; and
  • By the end of 2020, the rest of the commission’s recommendations needing legislation would have been introduced.

When the Hayne report was released early this year, the government agreed to act on all the recommendations.

But one recommendation it has notably not signed up to was on mortgage brokers.

Hayne found that mortgage brokers should be paid by borrowers, not lenders, and recommended commissions paid by lenders be phased out over two to three years.

The government at first accepted most of this recommendation, announcing the payment of ongoing so-called “trailing commissions” would be banned on new loans from July 2020. Upfront commissions would be the subject to a separate review. Four weeks later in March, Frydenberg announced the government wouldn’t be banning trailing commissions after all. Instead, it would review their operation in three years.

Releasing the timetable, Frydenberg said the reform program was the “biggest shake-up of the financial sector in three decades” and the speed of implementation “is unprecedented”.

“It will be done in a way that enhances consumer outcomes with more accountability, transparency and protections without compromising the flow of credit and competition,” he said.

He undertook to ensure the opposition was briefed on each piece of legislation before it came into parliament.

“This will begin with the offer of a briefing by Treasury on the implementation plan. Given both the government and opposition agreed to act on the commission’s recommendations, we expect to achieve passage of relevant legislation without undue delays,” he said.

He said the industry was “on notice. The public’s tolerance has been exhausted. They expect and we will ensure that the reforms are delivered and the behaviour of those in the sector reflects community expectations”.The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

NOW READ: Bank watchdogs on notice: What does the royal commission mean for small business lending?

NOW READ: Mortgage brokers rejoice as Coalition backflips on trail commission ban

Advertisement
Michelle Grattan

Michelle currently holds an academic position at the University of Canberra and is associate editor (politics) and chief political correspondent at The Conversation. She was the former editor of The Canberra Times, was political editor of The Age and has been with the Australian Financial Review and The Sydney Morning Herald.