Treasurer Josh Frydenberg released the road map at the start of the week and committed the government to acting on all 76 of the recommendations.
“This commitment represents the largest and most comprehensive corporate and financial services law reform package in the three decades since the Corporate Law Economic Reform Program (CLERP) in the 1990s,” said the Treasurer.
In commissioner Hayne’s final report there were 76 reforms, of which 54 were directed to the government and 40 of which require legislation.
Shortly after the release of the recommendations, the government announced a further 18 commitments to address issues that had been raised in the report.
Since then, eight of the 54 recommendations have been implemented as well as seven of the additional 18.
Some of the recommendations already completed include the undertaking of the APRA capability review, the requirement for financial firms to co-operate with AFCA and the undertaking of a review of universal terms for MySuper products.
In progress are recommendations like the removal of claims handling exemptions and legislation to end grandfathered commissions for financial advisers.
“The need for change is undeniable, and the community expects that the government’s response to the royal commission will be implemented swiftly,” said Mr Frydenberg.
By the end of the year, the Treasurer expected one-third of the commitments to have been implemented or legislation introduced and by mid-2020 up to 90 per cent of the commitments will have been implemented.
The Treasury and office of parliamentary counsel have been provided with a further $9.3 million to ensure the timetable can be met, in addition to the $12.1 million that was already in the budget.
Already in the budget includes a Financial Advice Review and the establishment of a regulator oversight authority.
The plan will take up 75 per cent of the legislative agenda for the Treasury, which represents roughly 25 per cent of the total government program.
“In three years’ time, the government will establish an independent review to assess the extent to which changes in industry practices have led to improved consumer outcomes and the need for further reform,” said Mr Frydenberg.
There will be a similar review into the regulators at the same time, which will be undertaken by the financial regulator oversight authority.
Industry response
Shadow treasurer Jim Chalmers said that the government was dragging its feet in implementing the recommendations.
“After so much delay already, today’s announcement that the recommendations won’t be implemented for another 15 months will be deeply disappointing for the victims of banking misconduct,” he said.
Mr Chalmers said the government pretended to care about banking misconduct but its actions had shown otherwise.
“We need to see the royal commission recommendations implemented properly and in a timely way so that Australians can have confidence that the rorts and rip-offs uncovered there have been properly dealt with,” he said.
The Australian Institute of Superannuation Trustees welcomed the release of the government’s time line, but chief executive Eva Scheerlinck agreed with Labor and said it had been too slow.
“The government’s response so far has been tepid at best. It is crucial for restoring consumer trust in Australia’s financial system that key recommendations to address harmful conflicts of interest in the financial services sector are prioritised and implemented in a way that will improve outcomes for all Australians,” Ms Scheerlinck said.
Ms Scheerlinck said that the coalition government’s legislated response to the recommendation to end grandfathered remuneration had been disappointing.
“While the new law puts a stop to financial advisers charging fees-for-no-service, it does not remove the incentive for advisers to recommend that clients stay in existing, often poorly performing and expensive products,” Ms Scheerlinck said.
The clients can always switch products themselves if there is no Adviser attached…. but to take personal responsibility would be too much for society these days.
It is $3K in compliance costs (SOA) to move a client between products. If a client is not willing to pay that, they will remain there.
The road map leads to a steep cliff.
Fascinated to know just how many of the recommendations from the RC into Unions were implemented without fear or favour or concern for innocent collateral damage.
It is not Advisers leaving clients in these funds it is the product manufacturers who don’t want to lose their revenue, it’s time for the product owners to do something instead of living on the gravy trains. Give us the chance they would be moved. Time for politicians to man up and let clients with grandfathered positions move to the more competitive products without it affecting Centrelink arrangements. Time for product manufacturers to get out from behind their desks and do something.
Chalmers and Frydenberg are both clowns in my opinion.
One simply throws out negative comments each day in order to just get his name up in lights (with no clue whatsoever what’s he’s talking about). The other is simply playing politics to enhance his own personal agenda with scant regard for the impact its causing hardworking honest advisers who are now are slowly disappearing and leaving the industry altogether.
All I want is for these people to be held as accountable for their actions as advisers are every day. Just a fair playing field for all.
(Pfffft, good luck with that he says to himself!)
Please explain! Why does Ms Scheerlinck think there is still an incentive for advisers to recommend clients stay in existing expensive products? What is the incentive if trailing commission comes to an end?