Sixteen days after receiving the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the Labor Party has provided part-responses to five – or around six per cent – of Commissioner Hayne’s 76 recommendations.
In their pursuit of yet another political stunt, Labor is again ignoring Commissioner Hayne’s finding that complexity of financial services laws has been part of the problem. Labor’s desire to rush ill-conceived laws into Parliament is irresponsible and clumsy and will only compound the problem.
The legislation drafted by Labor has serious flaws and would not achieve its stated objectives. This is yet another example of why Labor cannot be trusted to properly implement the recommendations of the Royal Commission.
Recommendation 1.7 – Removal of point-of-sale exemption
Labor’s part-response: Will leave thousands of businesses in limbo, unable to support their customers and require them to obtain an Australian Credit Licence from the Australian Securities and Investments Commission (ASIC) without providing them the time necessary to do so.
Government action: At the Government’s request, a consultation paper is being prepared by the Financial Services Reform Implementation Taskforce which will enable appropriate consultation to take place in order to implement this recommendation in a manner that ensures balance is achieved between consumer protection and access to products and services.
Recommendation 2.4 – Grandfathered commissions
Labor’s part-response: Is defective in multiple respects and contains loopholes that would allow grandfathered remuneration to be retained by product manufacturers and not be passed on for the benefit of consumers.
Government action: At the Government’s request, the Taskforce has been working on exposure draft legislation which the Government aims to release on Friday 22 February 2019.
Recommendation 4.2 – Removing the exemptions for funeral expenses policies
Labor’s part-response: Would require providers relying on the funeral expense exemption to obtain an Australian Financial Service Licence (AFSL) from ASIC without providing them with the time necessary to do so.
Government action: Removing the exemption for funeral expense policies can be achieved by making a regulation which does not require the Parliament to be in session. At the Government’s request, Treasury has consulted with ASIC on repealing the exemption, while also ensuring the interests of consumers who currently hold policies with such firms are protected.
Recommendation 4.8 – Removal of claims handling exemption
Labor’s part-response: Is defective. While it removes the formal exemption by repealing the relevant regulation, some of the claims handling activities carried on by insurers will not fall within the current definition of a “financial service” and so not be captured.
Government action: At the Government’s request, the Taskforce is preparing a consultation paper for public release next week.
Recommendation 4.11 – Co-operation with AFCA
Labor’s part-response: Contains significant gaps as Australian Credit Licence holders including some banks, non-bank lenders and mortgage brokers would not be required to cooperate with AFCA under Labor’s amendments.
Government action: This recommendation can be achieved by making a regulation, which does not require the Parliament to be in session. At the Government’s request, the Taskforce is preparing a regulation to be finalised in March that will ensure all consumers that are subject to dispute resolution by AFCA benefit from this recommendation.
Labor’s farcical attempt today follows bungled amendments to legislation last week, where they proposed retrospective penalties on superannuation fund directors back to October 2015. These were also put forward without consultation, had the potential to set a very dangerous precedent and resulted in an embarrassing Labor backdown.
Despite Labor’s ill-conceived efforts today, the question remains, when will the political stunts end and Australians get to see their full response to the Royal Commission? In particular, where do they stand on Recommendation 1.3 in regard to mortgage broker remuneration and Recommendation 3.5 in regard to one default superannuation account?
The Coalition Government has passed two of Commissioner Hayne’s recommendations in the Senate before Labor has even provided a full response to the Final Report. Restoring trust in Australia’s financial system is part of the Coalition Government’s plan for a stronger economy.