Treasurer Josh Frydenberg has pledged that the government “will take action” on all the recommendations commissioner Kenneth Hayne made in his savage final report for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
In the 951-page report publicly released on Monday afternoon, Hayne made 76 recommendations and highlighted 19 instances of potential misconduct through 22 entities. He referred 24 companies to regulators for possible criminal or civil action- the companies include National Australia Bank, AMP, IOOF, the Commonwealth Bank and ANZ.
Frydenberg said on Monday afternoon that, “It’s a scathing assessment of conduct driven by greed and behaviour that was in breach of existing law and fell well below community expectations.”
The federal government made its pledge to “act” on all the recommendations, despite it voting against a royal commission into the financial services sector 26 times.
“In disbelief, the nation has heard evidence prepared – presented before the commission – of hundreds of millions of dollars in fees for no service, companies misleading and obstructing regulators, the charging of dead people, the sale knowingly of worthless insurance policies,” Frydenberg told a media conference on Monday afternoon.
“In commissioner Hayne’s own words, ‘There can be no doubt that the primary responsibility for misconduct in the financial services industry lies with the entities concerned and their boards and their senior management.
Shadow treasurer Chris Bowen in his own media conference on Monday afternoon said the opposition accepted “in principle each and every recommendation. We regard this report as the minimum of action that should be taken”.
“We have had report for the last few hours.. a Labor government accepts in principle all these recommendations…We think they are appropriate. We would have more to say about implementation details…we feel that there is more to do,” he said.
At the same time Bowen accused the Liberal government for using “weasel words,” saying it hadn’t “adopted the recommendations”.
“We adopt all recommendations in principle, and sit down with all affected parties but we accept them. The government cannot say they have accepted the recommendations. They have used weasel words about various recommendations,” he said.
In his final report, Hayne made 10 recommendations relating to financial advice and seven relating to superannuation. In line with the interim report issued in September last year, it was scathing of regulators APRA and ASIC.
He also recommended that a three-person oversight body be set up to monitor their effectiveness, with Frydenberg announcing a Graeme Samuel-led review of APRA.
Frydenberg said his government would ensure that new fund members entering the system would have one account for life – a recommendation that mirrors the final report of the Productivity Commission.
“We will also prohibit the deduction of advice fees from MySuper accounts,” he said.
“Hawking super and insurance will be prohibited, preventing some of the most disturbing stories the royal commission heard of vulnerable people being sold policies they didn’t need.”
The government said it would extend the banking executive accountability regime (BEAR) to insurance and super, giving APRA oversight, in line with Hayne’s recommendation.
“Both trustees and directors will be subject to civil penalties for breaches of their duties,” Frydenberg said.
The government would also update legislation before Parliament related to trustee duties, he added, although he allowed that there were few sitting days for the government to get changes through.
Bowen too suggested there was scant time for any legislative change, but said it was “important for the government of the day to get on with an implementation of its recommendations”.
“They could and should be implemented as a matter of urgency. If there were more sitting says… we may get them passed,” he said on Monday afternoon.
On Friday, Hayne and commission chief executive Toni Pirani delivered the final report to Governor-General Peter Cosgrove, with the government considering it before it’s public release at 4:20pm on Monday.
Ahead of the report’s release, opposition leader Bill Shorten said “victims” of “financial institutions” had been on a “long journey”.
“We will keep being in their corner and we will make sure this government does not backslide on the banks, stops trying to give them a $17 billion tax cut.
“They spent two years and 26 votes to stop this royal commission report today. I for one feel vindicated in Labor’s position,” said Shorten.
The royal commission kicked off in March and across 68 days of hearings and more than 10,000 public submissions, bad practices in the superannuation, banking and insurance sectors were laid bare.