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Consumer advocates comment on draft legislation that responds to over a quarter of Banking Royal Commission recommendations

Consumer Credit Legal Service (WA), CHOICE, Consumer Action Law Centre, Financial Counselling Australia, Financial Rights Legal Centre and Super Consumers Australia have today published policy submissions that respond to 22 of the Royal Commission’s 76 recommendations.

Consumer Credit Legal Service (WA), CHOICE, Consumer Action Law Centre, Financial Counselling Australia, Financial Rights Legal Centre and Super Consumers Australia have today published policy submissions that respond to 22 of the Royal Commission’s 76 recommendations. 

Full consumer group submissions available on Dropbox here: https://shwca.se/BankRCSubsMar2020

After the shocking scandals of the Royal Commission, consumer groups are supportive of the Treasurer Josh Frydenberg’s efforts to enact recommendations but have warned about the risks of allowing loopholes and exemptions in the new laws. 

"This is a pivotal moment in implementing Commissioner Hayne’s vision. If passed without loopholes or carve-outs, these laws will be an important step towards embedding greater fairness in the system, ensuring that the financial wellbeing of customers is truly prioritised," says CHOICE CEO Alan Kirkland.

"No longer will insurers and their retailing partners be able to flog junk insurance through harmful unsolicited and add-on sales practices," says Gerard Brody, CEO of Consumer Action. "The desire of large companies to continue cross-selling insurance to their marketing lists isn’t a basis for an exemption from these critical reforms."

"ASIC's new powers means the regulator will now have the power to ensure people who have been ripped off are effectively compensated, which is a long overdue and much-needed reform," says Mr Brody.

"The need for financial counsellors in Australia is growing, not shrinking. The Banking Royal Commission showed just how badly reform is needed and it's great to see the recommendations being acted on as a priority. We don't want to be back here in ten years. Fix it now. do it properly and make sure Australians have access to financial counselling support," says Fiona Guthrie, CEO of Financial Counselling Australia

"Reform of insurance regulation is long overdue. From shifting the onus back on to insurers to ask policyholders the right disclosure questions and limiting life insurers ability to avoid contracts, to regulating the sale of junk insurance products and ending the damage wrought by unsolicited selling, the time has come for the insurance sector to clean up its act," says Karen Cox, CEO of Financial Rights. 

"These reforms will protect people from having their retirement savings eaten away by ‘fees for no service’. If passed, stronger laws will also empower ASIC and APRA to stamp out unfair behaviour by superannuation funds," says Xavier O’Halloran, Director of Super Consumers Australia.

"These reforms address systemic conduct that has continued to harm consumers since the Royal Commission. We are pleased to support the WA consumer voice in responding to the draft legislation," says Gemma Mitchell, Managing Solicitor of Consumer Credit Legal Service (WA).

Media contact: 0430 172 669, media@choice.com.au

Policy experts on each Banking Royal Commission reform are available for comment.

Editor’s notes:

A copy of policy submissions written to the Treasury can be found in the Dropbox here: https://shwca.se/BankRCSubsMar2020

Consumer organisations united to respond to 24 separate pieces of Royal Commission legislation. The following organisations are leading specific Royal Commission reforms and will be available for comment.

Royal Commission recommendation 

Organisation leading reform and available for comment

Recommendation 1.15 - Enforceability of financial services industry codes

Financial Rights 

Recommendations 1.6, 2.7, 2.8, 2.9 and 7.2 Strengthening breach reporting

CHOICE

Recommendations 2.1 and 2.2 - Ongoing fee arrangements in financial advice and disclosure of lack of independence

CHOICE

Recommendation 3.1: Trustees of Registrable Superannuation Entities (RSE) should hold no other role or office

Super Consumers Australia

Recommendations 3.2 and 3.3 - Advice fees in superannuation

Super Consumers Australia

Recommendation 3.4 and 4.1 - No hawking of superannuation and insurance products

Consumer Action and Super Consumers Australia

Recommendation 3.8, 6.3, 6.4 and 6.5 - Superannuation regulator roles

Super Consumers Australia

Additional commitment in response to recommendation 4.2 - restricting use of the term 'Insurance' and 'Insurer'

Financial Rights 

Recommendation 4.3 - Deferred sales model for add-on insurance

Consumer Action

Recommendation 4.4 - Cap on vehicle dealer commissions

Consumer Action

Recommendation 4.5 - Duty to take reasonable care not to make a misrepresentation to an insurer

Financial Rights

Recommendation 4.6 - Limiting avoidance of life insurance contracts

Financial Rights

Recommendation 6.14 - Financial Regulator Assessment Authority

CHOICE

Additional commitment in response to recommendation 7.2 – ASIC directions power

Consumer Action