Industry bodies have submitted mixed responses to the latest Senate inquiry into consumer protection in financial services, with some questioning the necessity of the review while others declare there are gaps yet to be filled.
Labor announced in November 2016 that it had set up the Senate standing committees on economics inquiry into consumer protection in the banking, insurance and financial sector in an effort to allow victims of scandals to have their voices heard.
In its submission to the inquiry, the FSC said it would not be in the best interests of consumers for Parliament to proceed with yet another review when the recommendations from current or previous reviews have not had time to be implemented properly.
“It would be a disservice to consumers if important reforms continued to be ignored or delayed as a result of ongoing parliamentary and industry reviews,” the submission states.
The FSC recommended that the committee "undertake a gap analysis to identify whether or not there are deficiencies in the consumer protection framework established through recent reviews and inquiries, including reviews and recommendations that remain uncompleted and unimplemented".
The FPA's submission followed the same vein, saying it would be "inappropriate and pre-emptive" to consider any flaws in the laws without accepting that there are reforms currently still in progress.
On the other hand, the AFA has said that while current reforms form a strong framework to protect consumers, more can be done.
“The AFA considers that there are a number of other areas that require further consideration or interim implementation to better protect consumers in the financial services sector,” the AFA submission states.
“The AFA recommends that further reform of consumer protections requires a holistic approach involving a mixture of immediate statutory amendments, some short-term reviews to review the consequences of ongoing proposals for change and better regulator resourcing.”
According to the AFA, some of the actions that must be taken to better protect consumers include extending the ban on conflicted remuneration beyond just financial advice to retail clients.
The association also called for a wider application of the Life Insurance Code of Practice as well as ASIC to be immediately granted the ability to vet and approve any financial product that intends to be classified as a wholesale product and anything that classifies itself as an alternative investment/asset class.
“The AFA is committed to supporting improvements in these key areas and considers that these reforms need support from the government as a matter of priority to ensure that the standard of protection to Australian consumers is improved,” the AFA said.
Meanwhile, the Australian Institute of Superannuation Trustees believes that the previous and current review and remediation programs being looked at by banks are not enough.
“The fact that, despite a succession of regulatory failings, so few bank senior executives have lost their jobs is a reflection of the poor culture within the banks which continue to place profits ahead of customers,” the AIST said.
The AIST recommends that “a clear signal” be sent to the for-profit side of the financial services industry by removing exemptions, gaps and inconsistencies in the legislative environment and that the committee ban all commissions and other forms of conflicted remuneration for the sale of retail life insurance policies.
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