Royal commission push polarises opinions

12-Apr-2016

By Kristen Crawford

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The Financial Services Council (FSC) and Treasurer Scott Morrison have rejected the Labor Party’s call for a royal commission into financial services, branding such a move unnecessary and inefficient, while a prominent industry whistleblower believes it would be long overdue.

FSC chief executive Sally Loane said the financial services industry was highly regulated and had been subject to enormous scrutiny over the years, most recently through the Financial System Inquiry.

“The financial services industry has been subject to no less than 14 separate reviews into the superannuation, financial advice and life insurance sectors over a recent period of time. Some of these have led to legislation, increased regulation and better consumer protections and outcomes,” Loane said.

“Where poor practices have been identified, the financial services industry has led reviews to understand where consumers were affected and put legislation in place to permanently address shortcomings.

“Australia’s financial services industry is one of the most highly regulated in the world. It employs 451,000 people and contributes 9 per cent to gross domestic product.

“A royal commission would be unnecessary and an ill-considered use of time and resources at a time when business, particularly the financial services sector, is looking for greater growth as Australia transitions from a resources economy to a services-driven economy.”

In a doorstop interview in Sydney yesterday, Treasurer Scott Morrison added further support to the FSC’s position, saying the government remained opposed to the idea of a royal commission because ASIC already held its equivalent powers.

“ASIC can actually do more than a royal commission can right now,” Morrison said.

“So, that's what we'll continue to focus on. There are currently prosecutions that are being pursued in relation to these precise matters and I think that's exactly what ASIC should be doing.”

However, Commonwealth Financial Planning whistleblower Jeff Morris came out in support of a royal commission in a radio interview over the weekend, saying he had been publicly calling for the same thing for the past three years.

“I saw things nearly eight years ago at Commonwealth Bank that were so appalling in terms of what they were doing: the deceit of customers, the cover-up by management of crooked financial planners, the sheer greed of the remuneration system and the way that that seduced any personal ethics,” Morris said.

“I found that the regulator, ASIC, was useless basically, which also helps to explain how the industry got itself to this stage.”

Despite ASIC being responsible for investigating unethical behaviour in the sector, he said he was convinced the corporate regulator was not up to the job because of how it had managed the situation in relation to Commonwealth Bank of Australia.

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