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24 new laws needed to make Australian financial services fair
The passage of 24 separate pieces of legislation through Parliament could be “a pivotal moment” in implementing commissioner Hayne’s vision post-banking royal commission, according to consumer advocates.
24 new laws needed to make Australian financial services fair
With the weekend’s deadline for submissions regarding the legislation now final, CHOICE CEO Alan Kirkland said that if the laws are passed without loopholes or carve-outs, they will mark “an important step towards embedding greater fairness in the system”.
It would ensure that “the financial wellbeing of customers is truly prioritised”, he said.
CHOICE indicated that it had teamed up with Consumer Credit Legal Service (WA), Consumer Action Law Centre, Financial Counselling Australia, Financial Rights Legal Centre and Super Consumers Australia to submit policy submissions in response to 22 of the royal commission’s total 76 recommendations.
It means they have united to respond to 24 separate pieces of legislation during recent consultation periods.
The groups have expressed their support of the federal treasurer’s efforts to enact the recommendations, but also warned about the risks of allowing loopholes or exemptions to exist within the new laws.
Some of the recommendations that will soon be legislated for include around enforceability of financial services codes, the strengthening of breach reporting, the existence of ongoing fee arrangements and advice fees in superannuation.
Others home in on superannuation and insurance product hawking, add-on insurance and the duty to take reasonable care, among other concerns.
Weighing in on the recommendations and the prospect of legislation, Consumer Action CEO Gerard Brody highlighted how “no longer will insurers and their retailing partners be able to flog junk insurance through harmful unsolicited and add-on sales practices”.
“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,” Mr Brody said.
In addition, Mr Brody flagged how new powers held by ASIC “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”.
On the subject of insurance, the CEO of Financial Rights, Karen Cox, has noted how reform 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,” she argued.
For Fiona Guthrie, the CEO of Financial Counselling Australia, the submission process and the royal commission itself have highlighted that 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,” she said.
“We don’t want to be back here in 10 years.”
“Fix it now. Do it properly and make sure Australians have access to financial counselling support.”
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