The Treasury has released its royal commission implementation roadmap to set out how it will deliver its response to the various recommendations that came out of the review.
In the Royal Commission’s final report 76 recommendations, 54 were directed to the Government, 12 to the regulators and 10 to the industry. Of the 54 recommendations directed to the Government, over 40 require legislation.
In addition to the Commission’s 76 recommendations, the Government in its response announced a further 18 commitments to address issues raised in the Final Report. The Government has implemented 15 of the commitments it outlined in response to the Royal Commission’s Final Report. This comprises eight out of the 54 recommendations that were directed to the Government and seven of the 18 additional commitments the Government made as part of its response.
Treasurer Josh Frydenberg released the roadmap and committed the government to acting on all 76 of the recommendations. He said, “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.”
The response represents a comprehensive package of reforms to:
• strengthen and expand protections for consumers, small businesses and those in rural and remote communities;
• ensure we have strong, effective regulators;
• enhance the accountability of financial firms, their senior executives and boards; and
• further improve remediation and redress for consumers and small businesses harmed by misconduct.
Treasurer Frydenberg has confirmed that excluding the reviews that are to be conducted in 2022, under the Implementation Roadmap:
- by the end of this year, more than 20 commitments, around one third of the Government’s commitments, will have been implemented or have legislation before the Parliament;
- by mid 2020, more than 50 commitments, close to 90 per cent of commitments, will have been implemented or have legislation before the Parliament; and
- by the end of 2020, remaining Royal Commission recommendations requiring legislation will have been introduced.
For measures contained in legislation introduced into the Parliament before 1 July next year, the Government expects the majority to commence by 1 July 2020 or Royal Assent.
In addition to the recommendations the Government will progress, 12 recommendations require action by the regulators — the Australian Securities and Investments Commission (ASIC) and the
Australian Prudential Regulation Authority (APRA) — and 10 recommendations require action by industry.
To support efficient and effective implementation of the Government’s response, the Treasury Royal Commission Taskforce has continued as the Financial Services Reform Taskforce.
The Government has provided $12.1 million to Treasury and the Office of Parliamentary Counsel (OPC) for implementation-related work in the 2019-20 Budget and will now provide an additional
$9.3 million to Treasury and OPC. The additional funding also includes resourcing for Treasury to begin the longer term task of considering how to simplify the law, consistent with recommendations 7.3 and 7.4 of the Royal Commission.
Treasurer Frydenberg said, “To ensure that our regulators can identify and take appropriate action in relation to misconduct, the Government is reforming breach reporting arrangements as recommended by the ASIC Enforcement Review.”
These changes will be done together with the Royal Commission recommendations to require financial services and credit licensees to increase information-sharing and reporting obligations and take action to detect misconduct and, where appropriate, remediate customers for misconduct by financial advisers and mortgage brokers. The Government will also implement the other recommendations of the Enforcement Review relating to banning, licensing, search warrants, access to telecommunications intercepts and providing ASIC with a directions power.
The Government will establish a financial regulator oversight authority to ensure that ASIC’s and APRA’s effectiveness in delivering on their mandates is subject to consistent and ongoing
independent assessment. The authority will undertake an assessment in three years’ time of the effectiveness of the changes made by the regulators following the Royal Commission.
The Government will also provide ASIC and APRA with updated Statements of Expectations, reflecting the Royal Commission’s findings and recommendations and the Government’s response.
Enhancing accountability Restoring trust in our financial system will require lasting change in the culture, governance and remuneration practices of financial firms. Boards and executives in these firms will need to drive this change — and the Government is committed to holding them accountable if they fail to act.
The Government is also creating a new disciplinary system for financial advisers that will include a single, central disciplinary body. The new body will be responsible for the registration, monitoring and sanctioning of financial advisers. This Royal Commission recommendation builds on the Government’s professional standards reforms to raise the educational, training and ethical standards of financial advisers. The Government will proceed with monitoring of the Code of Ethics introduced as part of those reforms, which require financial advisers, from 15 November 2019, to subscribe to a code monitoring body that will enforce the Code of Ethics from 1 January 2020.