Businesses will be held to account with the 2017 Federal Budget paving the way for large penalties, as well as introducing a suite of needed reforms to the banking sector.
Among the announced changes is an open data agenda expected to drive competition in the banking industry.
The minimum fine to be levelled against businesses has been lifted in a
move that will deter them from violating consumer rights. Companies caught
ripping customers off will have to pay the greater of $10 million, or three
times as much money made from a breach of consumer rights.
In instances where the value of a breach can't be calculated, then the fine
will be 10% of the previous year's turnover.
The fine represents a welcome increase from the current $1.1 million, says
Alan Kirkland, chief executive of CHOICE.
"The 2017-18 Federal Budget has recognised that companies doing the wrong
thing by their customers need to be held accountable for their actions.
"We've seen a spate of recent cases where companies have been given a tiny
penalty when they've made millions in profits from bad behaviour.
Businesses will now pay attention to penalties, rather than being able to
treat them as a minor write-off."
This was the case when the manufacturer of Nurofen, Reckitt Benckiser, was
originally fined $1.7 million for offences estimated to make them $63
Banks too will face larger fines, as well as measures intended to drive competition
and a tax hike expected to generate billions in revenue.
Heavy fines will be handed down to banks trying to cover up misconduct. Small
banks will face penalties starting at $50 million, while larger banks will
face fines starting from $200 million.
The Treasurer announced an open data agenda expected to drive competition
in the sector. Customers will be granted ownership of their data and will be able to request it to be forwarded to rival banks in an effort to determine if they stand to benefit from better-priced products.
The open banking regime will make it possible for customers
to "seek out better and cheaper services," says Treasurer Morrison.
Meanwhile a permanent team within the ACCC will be formed to
investigate competition in the banking and financial system.
CHOICE chief executive Kirkland described the reforms as "game changing".
"Consumers can expect better competition in banking," he says. "Giving consumers access to their own data that is held by banks will make
it easier to compare products and avoid being ripped off."
There are concerns the expense of a new tax on the largest banks will be passed on to consumers. However, CHOICE has challenged the big four banks to guarantee the tax won't be passed on, pointing to existing profit margins and saying it would be a test of competition in the sector.
The treasurer says the tax will generate $6.2 billion over the life of the budget.
"The levy will only affect our five largest banks with assessed liabilities
of $100 billion or more and does not apply to superannuation funds or
insurance companies," he says.
The Treasurer concluded his speech by describing the 2017 budget as responsible,
reiterating the principles of "fairness, security and opportunity".