All Australians have the right to be treated fairly and honestly in their dealings with financial services entities. It is fundamental to ensure consumers have trust in the financial system.
We have already reformed remuneration practices in the life insurance advice sector and introduced new educational and ethical requirements for financial advisers. We have protected consumers from being granted excessive credit limits and building up unsustainable debt across credit cards, and simplified how interest is calculated.
Legislation is before the Parliament to ensure financial products are appropriately targeted and to give the Australian Securities and Investments Commission (ASIC) the power to intervene to prevent consumer harm. Legislation is also before the Parliament which contains a comprehensive package of reforms designed to protect Australians’ superannuation savings from undue erosion by fees and insurance premiums, and to improve outcomes for members of superannuation funds.
We will further strengthen these protections, including by:
- requiring mortgage brokers to act in the best interests of borrowers;
- removing conflicts of interest between brokers and consumers by banning trail commissions and other inappropriate forms of lender-paid commissions on new loans from 1 July 2020 with a further review in three years on the implications of removing upfront commissions and moving to a borrower pays remuneration structure;
- ending the grandfathering of the conflicted remuneration provisions effective from 1 January 2021 and, in addition to the Royal Commission’s recommendation, requiring that any grandfathered conflicted remuneration at this date be rebated to clients;
- ensuring superannuation fund members only have one default account (for new members entering the system);
- protecting vulnerable consumers through clarifying and strengthening the unsolicited selling (anti‑hawking) provisions, including for superannuation and insurance products;
- prohibiting the deduction of any advice fees (other than intra‑fund advice) from MySuper accounts;
- supporting the expansion of the definition of small business in the Banking Code;
- establishing a comprehensive national scheme for farm debt mediation;
- supporting the elimination of default interest on loans in areas impacted by natural disasters;
- supporting the appointment of receivers or any other form of external administrator only as a remedy of last resort; and
- supporting more inclusive practices for Aboriginal and Torres Strait Islander persons.
The Royal Commission has also put industry on notice that it must step up and improve how it deals with distressed agricultural loans.