Consumers let down as Govt fails to action Banking RC two years after findings released
1st Feb 2021
Super fund members, bank customers and insurance policy holders have all been let down by the Federal Government’s failure to implement the recommendations of the Financial Services Royal Commission at the second anniversary of the release of Commissioner Hayne’s findings, says the Australian Lawyers Alliance (ALA).
“Two years ago, the Federal Government was quick to promise it would faithfully implement all 76 recommendations however it has failed to follow through,” said Mr Josh Mennen, spokesperson for the ALA. “A majority of the reforms have been delayed and, unbelievably, some have been abandoned completely.
“The Government often cites COVID-19 to justify the delays in implementing the Royal Commission recommendations however that doesn’t pass the ‘pub test’ given consumer protections are needed more, not less, during times of financial uncertainty and turmoil.”
February 1 marks the second anniversary of the release of Commissioner Hayne’s Financial Services Royal Commission findings, which were based on extensive hearings that revealed shocking corporate misconduct often at the expense of vulnerable or disabled customers.
“Two years is more than sufficient time for these vital reforms to be actioned,” said Mr Mennen. “It is very disappointing that a majority of the recommendations have been delayed and are yet to be introduced into Parliament.
“For example, the long-promised Compensation Scheme of Last Resort has not yet been introduced. The scheme will help consumers who have proven they were given negligent financial advice only to find the advice firm has gone bust and can’t pay up. This compensation would have been invaluable for those struggling during the high unemployment and economic turmoil wrought by the pandemic.
"It is unbelievable that some of the recommendations have been abandoned completely such as the ban on mortgage brokers receiving commissions from lenders – a practice which incentivises brokers to load customers up with excessive mortgages and unsustainable debt.
“In the case of responsible lending reforms, the government has defied Commissioner Hayne’s directions most notably with regard to the legislation currently before parliament to axe the bank’s obligations to make enquiries and verify whether a consumer can afford the loan. This is a recipe for financial hardship.
“Aspiring home owners should be given support and guidance in understanding their credit limitations. Instead they will have unprecedented access to credit with minimal accountability for banks and brokers who are riding high on an already inflated property market.”