Banking reforms aim to halt royal commission

10-May-2017

By Sarah Kendell

Email Article Print Article

Related Articles: | |

The federal government has moved to neutralise the opposition’s call for a royal commission into the banking industry with a slew of reforms aimed at improving accountability for misconduct within Australia’s major financial institutions.

Delivering his second budget to the House of Representatives last night, Treasurer Scott Morrison said the government was determined to see customers get a fairer deal from the big banks, and as such was improving the methods by which they could seek redress for misconduct.

“We are establishing a simpler, more accessible and more affordable one-stop shop for Australians to resolve their disputes and obtain binding outcomes from the banks and other financial institutions, to be known as the Australian Financial Complaints Authority (AFCA),” Morrison said.

“A new Banking Executive Accountability Regime will be introduced, requiring all senior executives to be registered with APRA (Australian Prudential Regulation Authority).

“If in breach, they can be deregistered and disqualified from holding executive positions, and be stripped of their significant bonuses.”

According to budget documents, the new complaints body would replace the three existing financial services industry dispute resolution schemes, with all financial services licensees required to be a member.

AFCA would hear consumer and investor disputes of greater value than the caps currently imposed on industry complaints schemes, and would be established on 1 July 2018, with the Superannuation Complaints Tribunal to be wound down by 1 July 2020.

The government would provide APRA with $4.2 million in additional funding to assist with administration of the new accountability regime for bank executives.

Morrison also detailed further reforms to improve consumer outcomes in financial services, including higher penalties for banks that breached misconduct rules and a greater focus on opening up the market to new competitors.

“A permanent team will be established within the ACCC (Australian Competition and Consumer Commission) to investigate competition in our banking and financial system,” he said.

“The introduction of an open banking regime in 2018 will [also] give customers greater access to their own data, empowering them to seek out better and cheaper services.”

The ACCC would receive $13.2 million in additional funding over four years to establish the financial system unit, which was a recommendation of the House of Representatives Standing Committee on Economics inquiry into the big four banks, according to budget documents.

Starting from 1 July, Australia’s five largest financial institutions would also be hit with an annual levy of six basis points on their liabilities, excluding consumer deposits of up to $250,000 and regulatory capital requirements, Morrison said.

« Back to Articles