The final report from the banking royal commission painted a picture of an industry that prioritised money over clients’ needs and welfare. The commission has released a set of recommendations aimed at supporting customers’ rights.
The report implied that many in the financial services sector were motivated by greed rather than looking out for their clients.
“If this is what happens in a regulated industry, imagine the situation in the property investment advice sector where spruikers can ruin people’s financial lives without much chance of prosecution because it is an unregulated environment?” Property Investment Professionals of Australia (PIPA) Chairman Peter Koulizos said.
The royal commission has proposed rules designed to curb the excesses it found in the sector.
These recommendations include prohibiting banks from paying commissions to mortgage brokers, which would be paid by home-loan borrowers; making brokers liable to civil legal action, in the event that they fail to act in the best interests of the borrower; requiring financial advisers to disclose conflicts of interest in a written statement prior to giving advice; and establishing a compensation scheme of last resort for those with a “viable claim.”
The Law Council of Australia has welcomed the recommendations, saying that they will have significant impacts on the banking and financial services sector, as well as on the way consumers are treated.
“Australians were rightly shocked by some of the stories heard during the extensive Royal Commission hearings – of profit being put before people and in some instances the rule of law. The recommendations put forward by Commissioner Kenneth Hayne have placed consumers first and established a roadmap with the potential to set the path straight into the future, ensuring banks and those providing financial services are held to account,” Arthur Moses SC, Law Council of Australia president. “Central to the Law Council’s submission was the call for simplification of complex laws, making them easier to understand and administer and we are pleased by the recommendations supporting this shift.
The banking royal commission also recommended increasing penalties for lawbreakers and expanding enforcement, powers for regulators and industry-wide legislative simplification.
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