Treasurer Josh Frydenberg to stoke overhaul of banks

Josh Frydenberg will implement “the biggest shake-up” of financial services in three decades.

Treasurer Josh Frydenberg ... “the speed with which they (the recommendations) will be implemented is unprecedented”. Picture Kym Smith

Josh Frydenberg will fast-track “the biggest shake-up” of the ­financial services sector in three decades, pledging to implement the Morrison government’s ­reform commitments and recommendations made by Kenneth Hayne by the end of next year.

The Treasurer’s push comes as ASIC revealed it would have post-royal commission litigation ready to launch against financial services companies in “the next few weeks”.

Mr Frydenberg will today ­release a “royal commission ­implementation road map”, which he said would put the banking, superannuation and financial services sectors “on notice” and ensure they met “community ­expectations”.

Under the delivery plan, ­labelled by Mr Frydenberg as “ambitious”, the federal government has committed to move on all remaining royal commission recommendations requiring legislation by the end of 2020.

Ahead of unveiling the framework at a Victorian Chamber of Commerce and Industry event this morning, Mr Frydenberg said “the speed with which they (the recommendations) will be implemented is unprecedented”. “There is no understating the importance of the royal commission and its findings to the critical task of restoring trust in Australia’s ­financial institutions,” he said. “Commissioner Hayne was clear in his diagnosis of the problem and deliberate in his prescription of the solution. The public’s tolerance has been exhausted. They expect and we will ensure that the reforms are delivered and the behaviour of those in the sector reflects community expectations.”

Read more | ASIC to sue big banks ‘in weeks’

Mr Frydenberg said the “scale of the reforms” of the financial services sector, which contributed $163 billion to the Australian economy in 2017-18 and employs 440,000 people, would be ­delivered in a way that “enhances consumer outcomes”.

Writing in The Australian today, Mr Frydenberg says a key factor in Australia’s record 28 consecutive years of economic growth has “been the strength and performance of our financial system”.

“The royal commission into the Australian banking, superannuation and financial services industry has revealed the extent of the misconduct and the degree to which many of our financial institutions were acting below community expectations,” Mr Frydenberg writes. “Fees for no service, the charging of dead people, pressure selling of worthless insurance and firms misleading regulators were just some examples.

“In Commissioner Hayne’s own words ‘two themes ­recurred: dishonesty and greed’.”

Since the final Hayne report was delivered in February, listing 76 recommendations to clean up the banking and financial services sector, the government has implemented 15 of its commitments, including three pieces of legislation through the parliament. It has also released draft legislation in relation to expanding unfair contract terms to insurance and introduced a bill to end grandfathered commissions for financial advisers.

Mr Frydenberg said the ­“implementation road map” to rollout the reforms would be ­delivered through additional resourcing and a reliance on bipartisan support in the parliament. Labor has previously flagged “in-principle” support for the overhaul of the financial sector.

“My undertaking is that we will work closely with the opposition to ensure they are properly briefed on each piece of legislation before being introduced into parliament,” he said. “This will begin with the offer of a briefing by Treasury on the implementation plan.

“Given both the government and opposition agreed to act on the commission’s recommendations, we expect to achieve passage of relevant legislation without undue delays.”

After the Hayne report was handed down ahead of the May 18 election, the government, under pressure from the mortgage broking industry, baulked on a proposal to ban lucrative commissions. Labor also ­watered down its plans to implement the recommendation.

In a speech last month, Mr Hayne — whose commission held 68 days of public hearings, received 10,323 public submissions and heard evidence from more than 130 witnesses — attacked modern politics, suggesting trust in institutions had been “damaged or destroyed”.

Mr Frydenberg’s delivery road map, which excludes reviews to be conducted in 2022, pledges to have one-third of the government’s commitments ­finalised by the end of the year.

By mid-2020, the government aims to action more than 50 commitments — close to 90 per cent of its total commitments. The government predicts the implementation plan will take up 75 per cent of Treasury’s legislative agenda over the next year.

Mr Frydenberg said there were 24 streams of work under way in Treasury that were “progressing” the government’s royal commission commitments. In addition to the $12.1 million pledged in the April 2 budget, a further $9.3m will be provided to the Treasury and Office of Parliamentary Counsel to meet the government’s timetable.

In 2022, 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”.