‘Further public consultation’ needed for remaining royal commission laws

The government originally committed to introduce the compensation scheme of last resort (CSLR) – which would compensate anyone if an ombudsman or court decision is made in a consumer’s favour and the financial institution is unable to pay – to the House of Representatives in December last year following the release of the financial services royal commission’s report. However that deadline was pushed back to 30 June this year due to the ongoing COVID-19 pandemic.

The Treasurer told ifa that while it “remains committed” to implementing the Hayne royal commission, the government needs further consultation.

“Given their complexity and need for further stakeholder views, the government will commence further public consultation before the parliament resumes on how best to implement the two remaining substantive elements requiring legislative implementation, specifically establishing a financial accountability regime and establishing a compensation scheme of last resort,” the Treasurer said.

The FAR would hold finance executives accountable for misconduct and could see them hit with a $1,050,000 fine and disqualification from operating as an accountable executive.

However, the Treasurer added that “substantial progress” has already been made, saying that “over 78 per cent of the recommendations directed to government have been implemented”, while three Hayne recommendations relate to reviews to be undertaken next year.

It comes after consumer advocacy group CHOICE chief executive Alan Kirkland slammed the delays, saying “people who have lost money due to financial misconduct should not be waiting any longer”.

“Across Australia, victims of misconduct in the financial system continue to be left out of pocket. Some families are waiting on hundreds of thousands of dollars of compensation that can’t be paid until the scheme is up and running. These delays only add to the financial and emotional hardship suffered by these people,” Mr Kirkland said.

“It’s also critical that the Government moves to introduce the Financial Accountability Regime, to protect people from misconduct in the future.”

He continued: “The delay in establishing the Financial Accountability Regime law sends a message to banking executives that misconduct will go unpunished.

“The Australian community expects strong enforcement and penalties for banking executives when they break the law. That requires strong legislation, as recommended by Commissioner Hayne.

“We call upon the Treasurer to make these two reforms a priority for the first week that Parliament returns to work in August. Without them, wrongdoing by bank executives will continue to go unpunished, and people who have lost money due to misconduct will continue to go uncompensated."

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.