Royal Commission Interim Report
(28 September 2018 - Australia) Australian Federal Treasurer Josh Frydenberg stated that the government would be open to extending the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry proceedings at the request of Commissioner Ken Hayne.
The terms of reference require the interim report to be handed to the Governor-General no later than September 30. The interim report will be limited to the first four rounds of hearings which include consumer credit, financial advice, SME lending and regional community experiences while a further hearing round to consider the policy questions arising from the first six rounds will be held in November 2018.
The final report due in February 2019 will expand further on the final hearings relating to superannuation and insurance in addition to the final public hearing in November where bank CEOs will be cross examined.
The Treasurer has questioned the ability of Australian financial services regulators such as the Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulatory Authority (APRA) to address misconduct in the financial sector. The treasurer has specifically queried whether regulators have effectively held financial institutions accountable for breaches revealed by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
“If the royal commissioner wants the extra time, then the government will favourably consider such a request. Commissioner Hayne has done an excellent job to date. He’s been very professional and very focused in the hearing. The commission’s interim report is due to be released by 30 September, with the final report due in February” Mr Frydenberg stated. The treasurer’s comments follow the release of a report from ASIC that was highly critical of allegedly inadequate compliance systems operated by Banks and major financial services organisations.
The report claims they have been too slow to follow-up damaging breaches and episodes of misconduct, with ASIC Chairman James Shipton going as far as to say that ASIC is actively considering stricter enforcement action. ASIC is seeking to increase maximum criminal penalties from one to two years jail, introduce a civil penalty as an alternative to the A$50,000 criminal fine which is largely not viewed as a disincentive and redefine a "significant breach" to capture a wider set of behaviours. The report found bank customers were left out of pocket by more than A$450 million for an average of 2145 days.
Following its review of selected financial services groups’ compliance with breach reporting obligations, ASIC identified “serious, unacceptable delays in the time taken to identify, report and correct significant breaches of the law among Australia’s most important financial institutions”. ASIC's report names NAB as the worst offender when it came to identifying problems, taking an average of more than five years to recognise there was a problem to begin accompanied by a "systemic issue" of not notifying significant breaches to the regulator within the ten business days required by law. ANZ was the slowest at investigating and reporting a breach to ASIC, taking 213 days on average.
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