The Northern Territory news Tue 5 Feb 2019
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News Corp Australia
TUESDAY FEBRUARY 5 2019 NEWS 07 V1 - NTNE01Z01MA AUSTRALIAS financial regulators have been instructed to investigate more than 20 cases of misconduct and legal breaches allegedly perpetrated by the countrys leading financial institutions. Despite expectations Royal Commissioner Kenneth Hayne would name banking and finance identities who he believed should be prosecuted, he instead chose to direct inquiries into institutions rather than individuals. But the reprieve could be short lived with Mr Hayne No more games as Frydenberg adopts Haynes findings FINANCIAL sector misconduct must end and consumers must be put first, Treasurer Josh Frydenberg says. In its response to the 76 recommendations of the banking royal commission, the Government, which had reluctantly agreed to the inquiry, has outlined a series of steps including a new compensation scheme of last resort. My message to the financial sector is that misconduct must end and the interests of consumers must now come first, Mr Frydenberg said in the Governments written response released yesterday. From today, the sector must change, and change forever. Mr Frydenberg said the focus of the response would to restore trust in the financial system, delivering better outcomes for consumers, while keeping credit flowing and ensuring market competition. These objectives are vitally important to the health of the economy and therefore to the health of our community. He said too often conduct in Australias financial institutions had breached existing laws and fallen well below community expectations. Consumer protections will be strengthened with a ban on a range of lender-paid commissions on new loans from mid-2020, an end to conflicted remuneration from 2021, stronger anti-hawking laws and a national scheme for farm debt mediation. Insurers and super funds will face the same executive pay restrictions as banks (known as the BEAR) and the two key regulators ASIC and APRA will get expanded powers and wider coverage of the sector. As well, an extra $170 million is being provided to ASIC, APRA, the Commonwealth Director of Public Prosecutions and the Federal Court to deal with misconduct cases. Following evidence of the regulators failures in dealing with shonky conduct, there will be an independently chaired regulator oversight body. Having already put in place the new Australian Financial Complaints Authority a onestop shop for external dispute resolution the Government will also pay $30 million in compensation owed to almost 300 consumers and small businesses for the unpaid determinations of the Financial Ombudsman Service and the Credit and In vestments Ombudsman. As well, a key step will be a new compensation scheme of last resort to ensure that consumers can have their case heard and be confident that where compensation is owed it will be paid. The scheme will be paid for by the industry. AFCA will be able, for a 12month period, to deal with disputes dating to January 1, 2008. An existing task force in Treasury will become the Financial Services Reform Implementation Taskforce and an independent inquiry will be convened in 2022 to check on the progress of reform. Treasurer Josh Frydenberg yesterday at Parliament House releasing the final report of the banking royal commission Picture: KYM SMITH Criminal charges loom Commissioner wants action over fees for no service issuing a stern missive to the Australian Securities and Investments Commission urging the regulator to pursue criminal action over fees for no service, which could put offenders behind bars for up to 10 years. In the report Mr Hayne reveals he has written to ASIC naming three entities against which the regulator should consider taking criminal action. In addition to jail the offences also attract fines of almost $1 million for individuals and $10 million for body corporates or 10 per cent of turnover. In addition to concerns around the fee for no service scandal the commissioner found alleged misconduct and legal breaches relating to inflated superannuation fees and insurers failing to help customers experiencing catastrophic events in any efficient, professional, practical and compassionate manner. Commonwealth Bank will come under the most scrutiny with at least five referrals, NAB, Suncorp, ANZ, AMP, IOOF, Allianz, TAL and Youi were all referred to regulators for further investigation. Mr Hayne was particularly scathing of NAB accusing chair Ken Henry of being unwilling to accept criticism and that he and chief executive Andrew Thorburn did not appear to have learned from past actions. I thought it telling that Mr Thorburn treated all issues of fees for no service as nothing more than carelessness com bined with system deficiencies when the total amount to be repaid by NAB and NULIS on this account is likely to be more than $100 million, Mr Hayne said. Mr Hayne said he was convinced CBA chief executive Matt Comyn and ANZ chief executive Shayne Elliott were aware of the size and nature of the tasks that lie ahead. New cases referred to ASIC or the Australian Prudential Regulation Authority include: ALLIANZ had misleading and deceptive content about home, motor vehicle, travel and life insurance on its website for almost four years that it failed to report to ASIC. YOUI failing to appropriately handle a claim during Cyclone Debbie because it didnt fix a tarpaulin over a hole in its customers roof and repeatedly delayed reimbursements of temporary accommodation. COLONIAL First State provided potentially misleading communications to customers about their superannuation to keep them in existing investment options. SHERADYN HOLDERHEAD BANKING ROYAL COMMISSION FINDINGS QUICK GUIDE BANKING * In arguably the biggest shift, Mr Hayne said the home-loan borrower should pay the mortgage broker for finding a loan. At the moment the lender pays the broker via commissions. The Government isnt endorsing this switch in its entirety, but Labor likely will. * Mortgage brokers must be made to act in the best interests of the borrower. * Car dealers offering finance should be covered by consumer credit protections. * Banks must do a better job of providing access to services for people in remote areas and those who struggle with English. * Ban dishonour fees on basic accounts. * During a drought or other natural disaster, default interest is not to be charged on loans secured by farmland. FINANCIAL ADVICE * Each year provide in writing the services to be received and total fees to be charged. * Any ongoing conflicted remuneration pay that influences advice currently permitted should be axed as soon as possible. The Government supports this. * Consider reducing the cap on life insurance commissions, with the goal of ultimately getting to zero. * Set up a new disciplinary system for financial advisers. SUPERANNUATION * Change the machinery of the superannuation industry so people only have one default account. INSURANCE * Hawking of insurance should be banned. * Funeral insurance should be subject to consumer protection laws. * Cap the commission car dealers can earn on add-on insurances. PAY * The regulator of banks and insurers, APRA, should not only watch for financial risk but also misconduct and compliance risk. REGULATORS * Retain APRA and the corporate regulator, ASIC, but there needs to be a new authority independent of government to oversee the twin peaks.
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