Following 12 months of submissions and hearings, Commissioner Kenneth Hayne’s final report of the royal commission into misconduct in the banking, superannuation and financial services industry, has revealed 76 recommendations that will see financial services firms grappling with over the next few months.
Of the 76 recommendations, the regulators face 14 recommendations, banking with 17, financial advice with 10, superannuation with 9, insurance with 15, culture, governance and remuneration with 7, and 4 recommendations for other important steps.
In its recommendations for the regulators, the report has called for the establishment of a new oversight authority for APRA and ASIC, independent of government, to assess the effectiveness of each regulator in discharging its functions and meeting its statutory objects.
It calls for the authority to be comprised of three part-time members and staffed by a permanent secretariat and be required to report to the Minister in respect of each regulator at least biennially.
Further, Commission Hayne has called on the law to be amended to oblige each of APRA and ASIC to co-operate with each other; share information to the maximum extent practicable; and notify the other whenever it forms the belief that a breach in respect of which the other has enforcement responsibility may have occurred.
Federal Treasurer Josh Frydenberg said the government would act on all 76 recommendation of the final report.
Mr Frydenberg said the government would clarify ASIC and APRA’s regulatory roles and powers in superannuation, with ASIC becoming the primary conduct regulator.
APRA will also undergo a capability review this year, chaired by former ACCC chair Graeme Samuel.
The Customer Owned Banking Association chief executive Michael Lawrence welcomed the recommendation to strengthen the accountability of regulators.
“Regulation is not just about new laws, it is also about the decisions and behaviour of regulators, so it is pleasing that the royal commission has recommended measures to strengthen the accountability of regulators,” said Mr Lawrence.
“There have been many examples of regulatory over-reach that disproportionately impact smaller players, such as APRA’s investor lending caps, and these can ultimately act against consumers’ interests.”
The commission’s interim report had earlier drawn a scathing response from Federal Treasurer Josh Frydenberg, who criticised the failings of the corporate regulator, ASIC, in capturing and punishing misconduct.
ASIC responded to the interim report, saying it notes the “serious and important” observations, and will continue to assist the royal commission in its work with government.