Reforms recommended by the Banking Royal Commission will be delayed so the financial industry can recover from the coronavirus crisis, Treasurer Josh Frydenberg has announced.
- The Government says the financial sector needs space to recover from the coronavirus crisis
- Two sets of legislation were due to go through Parliament later this year
- The six-month delay comes as banks are stretched by the economic shock of coronavirus
Mr Frydenberg said in a statement that the Federal Government wants the financial industry to deal with the current economic crisis.
There were two rounds of legislation due to be introduced this year — the first in July, and the second in December.
Both will be delayed for six months.
“This announcement today balances the need to implement the recommendations of the Royal Commission with the need to ensure our financial institutions are in a position to devote their resources to responding to the significant challenges posed by the coronavirus,” Mr Frydenberg said.
The Government’s implementation timetable, released in August 2019, stated measures dealing with the hawking of superannuation and insurance products would be among those included in legislation to be introduced before June 30.
Rules about how annual fees were charged by financial advisers were also due to be dealt with by the middle of the year, along with imposing a cap on commissions paid to vehicle dealers when they added on insurance policies.
By the end of 2020, the Government was meant to have introduced a compensation scheme of last resort, as well as a new disciplinary system for financial advisers.
Draft legislation was released for public consultation earlier this year.
There are only three parliamentary sitting days scheduled for federal politicians before June 30, with the original sitting calendar thrown out as tough social restrictions to deal with coronavirus were introduced in March.
Parliament has only sat twice since early March, and that was to deal with emergency legislation.
Senior members of the Government have been concerned about how exposed the financial sector is during the coronavirus crisis, with the Australian Prudential Regulation Authority reporting banks have deferred repayments on mortgages and small business loans worth more than $160 billion.
Government accused of failing to act
The Federal Opposition took aim at the Treasurer’s announcement, labelling it a “failing” of the Government that the commission’s recommendations were not implemented before the coronavirus pandemic hit Australia.
The party demanded no further delays beyond the six-month deferral.
“Labor acknowledges the role that the banks are playing in the current crisis,” Opposition leader Anthony Albanese said in a statement.
“We support a strong banking system and the recent measures that have added needed liquidity and financial support during COVID-19.
“But the Australian public also have an expectation that the banking royal commission recommendations will be implemented.”
On Friday, the Australian Banking Association said 100,000 loans had been deferred over the past week alone.
The Government has previously knocked back criticism it was acting too slowly on the reforms, arguing the issues were incredibly complex.
It has already implemented 24 of the Commission’s 76 recommendations, with work continuing on a further 35 recommendations.