Today, the Government releases its response to the landmark Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Government is taking action on all 76 recommendations contained within the Royal Commission’s Final Report and in a number of important areas is going further. In his report, Commissioner Hayne has recognised the many significant actions the Government has already taken.
In outlining the Government’s response to the Royal Commission, the Government’s principal focus is on restoring trust in our financial system and delivering better consumer outcomes, while maintaining the flow of credit and continuing to promote competition. These objectives are vitally important to the health of the economy and therefore to the health of our community.
The Royal Commission conducted seven rounds of public hearings over 68 days, called more than 130 witnesses and reviewed over 10,000 public submissions. The Final Report of the Royal Commission, together with the Interim Report released on 28 September 2018, has provided a comprehensive and forensic inquiry of our financial system.
As we have heard, too often the conduct within our financial institutions has been in breach of existing laws and fallen well below community expectations. The price paid by our community has been immense and goes beyond just the financial. Businesses have been broken, and the emotional stress and personal pain have broken lives. As Commissioner Hayne has made clear: “there can be no doubt that the primary responsibility for misconduct in the financial services industry lies with the entities concerned and those who managed and controlled those entities”.
My message to the financial sector is that misconduct must end and the interests of consumers must now come first. From today the sector must change, and change forever.
Commissioner Hayne’s recommendations and the Government’s response advance the interests of consumers in four key ways. First, they strengthen and expand the protections for consumers, small business and rural and remote communities. Second, they raise accountability and governance standards. Third, they enhance the effectiveness of regulators. Fourth, they provide for remediation for those harmed by misconduct.
For the first time the Government will establish a compensation scheme of last resort to ensure that consumers can have their case heard and be confident that where compensation is owed it will be paid. This will be a scheme paid for by industry reflecting their obligation to right their wrongs.
I would like to thank Commissioner Hayne for the outstanding manner in which he has conducted the Royal Commission and express my gratitude for the tireless work of those involved. I also wish to acknowledge all of those individuals who provided submissions and came forward to give evidence. Their stories and experiences drive home the necessity for change.
The Government is confident that the actions announced today will put in place the legislative framework necessary, providing the regulators with the powers and the resources to hold those who abuse our trust to account. In doing so the community’s trust in our financial sector can and will be restored.
The Hon Josh Frydenberg MP
Treasurer