Treasurer Josh Frydenberg released the roadmap at the start of the week and committed the government to acting on all 76 of the recommendations.
“This commitment represents the largest and most comprehensive corporate and financial services law reform package in the three decades since the Corporate Law Economic Reform Program (CLERP) in the 1990s,” said the Treasurer.
In the final report by commissioner Hayne there were 76 reforms of which 54 were directed to the government and 40 of which require legislation.
Shortly after the release of the recommendations, the government announced a further 18 commitments to address issues that had been raised in the report.
Since then eight of the 54 recommendations had been implemented and seven of the additional 18 have been.
Some of the recommendations already completed include the undertaking of the APRA capability review, the requirement for financial firms to cooperate with AFCA and the undertaking of a review of universal terms for MySuper products.
In progress are recommendations like the removal of claims handling exemptions and legislation to end grandfathered commissions for financial advisers.
“The need for change is undeniable, and the community expects that the government’s response to the royal commission will be implemented swiftly,” said Mr Frydenberg.
By the end of the year the Treasurer expected one-third of the commitments to have been implemented or legislation introduced and by mid-2020 up to 90 per cent of the commitments will have been implemented.
The Treasury and Office of Parliamentary Counsel have been provided with a further $9.3 million to ensure the timetable can be met, in addition to the $12.1 million that was already in the budget.
The plan will take up 75 per cent of the legislative agenda for the treasury which represents roughly 25 per cent of the total government program.
“In three years’ time, the government will establish an independent review to assess the extent to which changes in industry practices have led to improved consumer outcomes and the need for further reform,” said Mr Frydenberg.
There will be a similar review into the regulators at the same time which will be undertaken by the financial regulator oversight authority.
Industry response
Labor treasurer Jim Chalmers said that the government was dragging their feet in implementing the recommendations.
“After so much delay already, today’s announcement that the recommendations won’t be implemented for another 15 months will be deeply disappointing for the victims of banking misconduct,” he said.
Mr Chalmers said the government pretended to care about banking misconduct but their actions had shown otherwise.
“We need to see the royal commission recommendations implemented properly and in a timely way so that Australians can have confidence that the rorts and rip-offs uncovered there have been properly dealt with.”
The Australian Institute of Superannuation Trustees welcomed the release of the government’s timeline, but chief executive Eva Scheerlinck agreed with Labor and said it had been too slow.
“The government’s response so far has been tepid at best. It is crucial for restoring consumer trust in Australia’s financial system that key recommendations to address harmful conflicts of interest in the financial services sector are prioritised and implemented in a way that will improve outcomes for all Australians,” Ms Scheerlinck said.
Ms Scheerlinck said that the Coalition government’s legislated response to the recommendation to end grandfathered remuneration had been disappointing.
“While the new law puts a stop to financial advisers charging fees-for-no-service, it does not remove the incentive for advisers to recommend that clients stay in existing, often poorly performing and expensive products,” Ms Scheerlinck said.
CEO of the Australian Banking Association Anna Bligh said banks had already begun work on making the changes that had been recommended to them by the royal commission.
“Since the final report was handed down six months ago, banks have been working to make changes to ensure that the recommendations become part of their operating fabric,” she said.
The ABA had already begun work on the six changes to the banking code that the report had recommended and it was on track for a 2020 implementation.
“The ABA has already drafted provisions implementing five of the changes, had them agreed to by banks and submitted them to the regulators for approval. These are now on track for full implementation by March 2020,” Ms Bligh said.
Heritage Bank’s CEO Peter Lock said that the mutual bank was supportive of the reform as outlined by Mr Frydenberg.
“Heritage is fully supportive of the reform agenda and implementation roadmap issued by the Treasurer today. We note that the roadmap focuses on strengthening and expanding protection for consumers, with today’s outline concentrating on legislative responses designed to achieve ensure fair treatment and address conflicts of interest,” Mr Lock said.
Mr Lock did just advise the government that the best way forward was for consumers to have access to a range of providers and that not all banks should be painted with the same brush.
“Consumers would be best served if Canberra continued to recognise that regulation should be applied with a lighter touch to those smaller operations who were not singled out in the Hayne royal commission,” he said.
