Labor promises financial services regulatory review

The Federal Opposition has flagged a make-over of Australia’s financial services regulatory regime in the event that it gains office at the next Federal Election.

The Opposition’s intentions were revealed by the Shadow Treasurer, Chris Bowen at the Financial Services Council (FSC) Leaders Summit in Sydney where he said such a make-over would be generated out of a Royal Commission into the banking and financial services industry.

He said the Opposition remained committed to holding a Royal Commission in circumstances where no one could argue with the impact of the industry misbehaviour that had occurred in recent years and the trauma and distress which had been inflicted on families.

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“There are compelling reasons for a thorough review of the financial services regulatory system in Australia,” Bowen said.

He said Labor’s review of the regulatory settings would examine what currently existed and what was needed to improve the current regime.

Bowen acknowledged that the Financial Systems Inquiry (FSI) had not recommended changes to the financial services regulatory settings but claimed much had changed since then.

“The time is right to review financial services regulatory architecture,” he said.

Bowen said the factors leading to that analysis were higher household debt, the ad hoc nature of recent regulatory changes and the rapid development of financial services technology.

“The system must be fit for purpose,” he said




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Chris Bowen is right as Fintech is changing banking and finance very quickly and Australia needs to keep up with the changes and how it is impacting on main street families. This post comment appeared on The International Monetary Fund Facebook Page article on the IMF and Fintech (https://www.facebook.com/imf/):

"Here is a list of the Central Bank Interest rates globally: https://en.wikipedia.org/.../List_of_countries_by_central.... It looks as though as though Andy Haldane, the Chief Economist at the Bank of England is right: https://www.businessinsider.com.au/chart-5000-years-of.... What are the dangers to variable interest rate countries that he is warning about? Any comments?
Here is an example of what could happen to low and moderate income families budgets if the IMF does not encourage (?) better home loan interest rate risk management processes with FinTech. ( It could be the foundation of GFC Mark 2)
https://www.commbank.com.au/.../calc.../home-loan-repayments
$500,000 for 30 years (P&I) @ 5.25% p.a. = $2,762.00 p.m.
$500,000 for 30 years (P&I) @7.75% p.a. = $3,583.00 p.m.
Increase =$821.00 p.m. or $9,852.00 p.a.

There is very few low and moderate income families that could cope with this change over 1/2 year period. Fintech can clearly help manage the risks better. This is how : http://5starinnovation.com/hamburg-g20-leaders.../.

What does the IMF and readers think. Is there a duty of care to borrowers from lenders about interest rate risk management? Talking about this issue can prevent a financial disaster. Thank you Andy Haldane from all the global main street people. Well done!"

We can't go back and change the pages of history, but we can change the future for the better and being proactive is of critical importance.

Keep ut the good work, Mike.

Best. John.

What about reviewing the health, real estate and lending industries providing essential services to Australians with undisclosed commissions? Why not spend the "royal commission" money on something that will actually help people?

We don't need a review into misconduct in the financial services industry - the problems are well understood and the laws that are currently in place are well suited to deal with them. The problem is that compliance with the law is not enforced because ASIC is underfunded - what is the point of putting more laws in place when the current laws are routinely ignored without there being any adverse consequences for those who do do so. A good example is PI insurance - the law is clear as to the characteristics of the insurance that has to be obtained - but in practice many financial planners operate with grossly inadequate (that is functionally useless) PI insurance and some even operate without having PI insurance at all - if ASIC has ever taken regulatory action about this issue (for example by banning someone) I'm not aware of it.

I wonder about the ties with the FSC and the Labor party and what effect this will have on us, and how Labor approaches this Royal Commission, few back slaps, hey you did good on LIF FSC, heres a bone for you, no investigation into members in the RC.

Thanks for all the above comments. It is true that that funding regulators will always be under pressure because they are a soft target as they are public servants and there is very little that they can do about it. There is,of course, a better way. If you had a paid whistleblower program like in the United States a lot of the regulatory work would be done for the regulator. It would also change the industry culture to a compliance culture. The problem now is that if you speak up on disclosures in the public interest whether to the government, publicly or internally to an organization leadership team you are exposing yourself
to reprisals. Here is an example of the program in the U.S. https://www.sec.gov/whistleblower/. The Internal Revenue Department in the United States has a similar program and have had some notable wins against fraud, corruption and non-payment of taxes (with recovery). Here is one IRS case: http://www.nytimes.com/2012/09
/12/business/whistle-blower-awarded-104-million-by-irs.html. Under the amnesty program related to the case the IRS recovered $5 billion and paid Birkenfeld $104 million. A better way of regulation or not? What do you think?

The comments on here are silly at best. Labor is intent on inflicting terminal damage to our industry full stop. Simple motivation is money. They get major funding from ISA. Kill the ISA opposition (us) and by default ISA grows wealthier hence labor and the unions profit.

If these arslings get in next election, be prepared for major pain and income disruption to the scale that it will make FOFA LIF and all prior changes pale in comparison, regardless if you are private wealth, fee for service, independent or traditional model or institution owned.

Time to forget our differences and band together, but of course with so much self interest and ego out there that will never happen.

@ Joe,
Correct but can you tell the difference between the Liberal Party and the Labour Party ?
You can vote Liberal and die from Bubonic plague or you can vote Labour and it will still be death by a thousand cuts.
If you still need to be convinced then ... digest this.
After the May budget, Anthony Albanese gave a thoughtful speech in Fremantle declaring the Turnbull government had delivered a "Budget of ideological surrender", embracing "Labour values".
Albanese depicted the government's tax and spend policies for Medicare,schools funding (Gonski), the NDIS and infrastructure as an "overwelming victory for the APL and the broader Labour movement.
A declared victory for the left.
Now what's the difference, more regulation more compliance with no discernible benefit to the consumer ... and the death of free enterprise !!!

Alleycat, totally agree with your comments, very well said.

Unfortunately the writing was on the wall when Turncoat removed the prior Senators who actually took the time and understood our industry & so were on our side (Ciobo/Cormann) and replaced them with his flunkeys.

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