First Federal Budget in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
2019-20 Federal Budget
Last week saw the first Federal Budget in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Federal Government announced they will provide $606.7 million over five years in response to the Royal Commission:
Use of Funding Amount
$2.6 million - Designing and implementing an industry-funded compensation scheme of last resort (CSLR) for consumers and small businesses.
$2.8 million - Providing the Australian Financial Complaints Authority (AFCA) with additional funding to help establish a historical redress scheme to consider eligible financial complaints dating back to 1 January 2008.
$30.7 million - Paying compensation owed to consumers and small businesses from legacy unpaid external dispute resolution determinations.
$404.8 million - Resourcing the Australian Securities and Investments Commission (ASIC) to implement it new enforcement strategy and expand its capabilities and roles in accordance with the recommendations of the Royal Commission.
$145.0 million - Resourcing the Australian Prudential Regulation Authority (APRA) to strengthen its supervisory and enforcement activities which will support its response to key areas of concern raised by the Royal Commission, including with respect to governance, culture and remuneration.
$7.7 million - Establishing an independent financial regulator oversight authority, to assess and report on the effectiveness of ASIC and APRA in discharging their functions and meeting their statutory objectives.
$1.0 million - Undertaking a capability review of APRA, which will examine its effectiveness and efficiency in delivering its statutory mandate, as well as its capability to respond to the Royal Commission.
$11.2 million - Establishing a Financial Services Reform Implementation Taskforce within the Treasury to implement the government’s response to the Royal Commission, and co-ordinate reform efforts with APRA, ASIC and other agencies through an implementation steering committee.
$0.9 million - Providing the Office of Parliamentary Counsel with additional funding for the volume of the legislative drafting that will be required to implement the government’s response to the Royal Commission.
On Monday 4 February 2019, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry release its final report containing 76 Recommendations. At 4:20pm, Treasurer Josh Frydenberg held a press conference announcing that the Government had agreed to adopt 75 of the 76 recommendations made by the royal commission, opting against fully implementing a suggested crackdown on mortgage brokers.
The most important recommendation for our clients is 7.1 – compensation scheme of last resort. The Government has agreed to this recommendation by stating:
“For the first time the Government will establish a compensation scheme of last resort to ensure that consumers can have their case heard and be confident that where compensation is owed it will be paid. This will be a scheme paid for by industry reflecting their obligation to right their wrongs.”
In a letter to Malcolm Turnbull last week Bill Shorten has suggested an extension of the inquiry, an apology and compensation scheme were the “least the government can do” in the future. SR Group sees this as a step forward in advocating for reform in the financial sector.
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