Treasurer's 'Roadmap' more a reminder than an explainer

ACCC APRA ASIC Financial Services Financial Services Royal Commission

In brief 4 min read

The Treasurer, the Honourable Josh Frydenberg, released the Government's 'Implementation Roadmap' today to 'provide clarity and certainty' about the Government's ongoing work to implement the recommendations of the Royal Commission into Misconduct into the Banking, Superannuation and Financial Services Industry. Perhaps he thought we had forgotten. The Roadmap tells us what the Government has done, not done and what it will do by the end of 2020. 

Responsible lending left alone, but new legislation to come 

The report starts off by reminding us that the Government's 'comprehensive response' in February to the release of the final report 'represents the largest and most comprehensive corporate and financial services reform package since the 1990s'. Perhaps. 

The Implementation Roadmap tells us what the Government has done and what it will do by the end of 2020. 

What the Government has done includes some things where it has done nothing at all (to be clear, doing nothing was recommended by the Royal Commission). Chief among these is making no change to the responsible lending laws that require lenders to determine whether a loan is 'not unsuitable' for a borrower. At least that's the Government's position for the moment.  ASIC may well be lobbying for a different one.

The report says the Government will, by the end of 2020, have introduced legislation to implement all those recommendations that required legislation. 

By the end of this year, the Government promises legislation that will introduce a best interests duty for mortgage brokers (although it will not extend all of the other requirements applying to financial advisers) and the (rather modest) changes to their remuneration that the Government proposed as an alternative to the Royal Commission's recommendation to ban upfront and trail commissions on loans.      

By 30 June 2020, the Government promises legislation requiring clients to opt into ongoing advice fees annually (instead of every two years) and prohibiting the deduction of advice fees from MySuper products. Legislation will also be 'introduced' that will require financial advisers to tell clients if they are not 'independent' and which will ban the unsolicited selling ('hawking') of superannuation products and insurance products. 

By the end of 2020, the Government promises legislation will be introduced extending BEAR (the banking executive accountability regime) to the other APRA-regulated financial institutions, including RSE licensees, life insurers, general insurers and health insurers. At the same time, it will provide an 'additional commitment' to extend BEAR to non-prudentially regulated financial entities. It is anyone's guess what that might mean.       

No commencement dates are suggested (although they were in the Government's February response) and we merely note that grandfathered investment commissions will finally end seven and a half years after the bans were introduced (as part of the Government's commitment to implement the Royal Commission recommendations).

Behold, the age of enforcement

Of course, as you will recall, the real bite in the Royal Commission recommendations was not in legislative change but in enforcement. And for that reason, it is probably not a coincidence the Implementation Roadmap followed hot on the heels of the release of Report 625 ASIC Enforcement Update. It says:

The Office of Enforcement is continuing its work on the 13 matters referred to ASIC by the Royal Commission as well as a significant number of matters that were examined as case studies in the Royal Commission hearings. 


While we do not comment on actual or potential investigations, we are prioritising our work on these matters and a significant number of other investigations into Australia’s major financial services institutions. We will continue to provide public updates on our enforcement actions when appropriate.

Today's press reports on Commissioner Daniel Crennan give something of an update. He is quoted as saying 'there are a very large number of investigations on foot' (which is news to no one working in the industry) and 'those matters will culminate in proceedings being issued before Christmas and over the next few months'.    

In the meantime, the largest financial institutions will continue to be hauled up to the Standing Committee on Economics to explain their progress in changing their culture and remuneration practices to 'put consumers at the heart of their businesses'.

As always, we wish you luck and would be very happy to discuss this with you.

The Allens FSR team