As the Turnbull Government enters the 12-month period during which it is likely to call the next Federal Election it is worth reflecting upon its performance with respect to the financial services industry and, on the face of it, it has barely earned a pass mark.
An analysis of what the Government has achieved during this term in office reveals a mish-mash of policy initiatives, many of them aimed at what may ultimately prove to be the futile exercise of heading off Opposition calls for a Royal Commission into the Banking and Financial Services industry.
As the political opinion polls currently stand, a Federal Election would see the installation of a Federal Labor Government. Commensurate with the repeated promises made by Opposition leader, Bill Shorten and Shadow Treasurer, Chris Bowen, we would then quickly be witness to the Royal Commission the Turnbull Government has so assiduously sought to avoid. Further, it would be a Royal Commission based on terms of reference dictated by the Labor Party and its supporters.
If and when that occurs, financial services firms will be left to consider the costs which attached to the initiatives imposed by the Turnbull Government to justify not holding a Royal Commission – the rush towards the imposition of the Australian Financial Complaints Authority (AFCA), the industry funding formula for the financial services regulators, the Bank Executive Accountability Regime (BEAR), the establishment of the Financial Adviser Standards and Ethics Authority (FASEA) and the Life Insurance Framework (LIF), to name just a few.
Those same financial services firms might also care to contemplate the Turnbull Government’s changes to the superannuation regime which are still rolling through the system, adding complexity, cost and a fair measure of uncertainty in the minds of superannuation fund members.
What should occur to the financial services industry is that the Government has done its best work when it has been driven by sound policy reasoning rather than political expediency. Thus, there is good reason to welcome the formation of the FASEA just as there is good reason to welcome the fact that the Government stood back and allowed the life insurance industry to develop and police its own code of conduct.
There is less merit to be found, however, in its pursuit of a somewhat open-ended industry funding model for the financial services regulators and the drive towards a one-stop-shop financial services external dispute resolution (EDR) regime which has not been fully costed and the transitionary arrangements for which are dangerously imprecise.
Governments are ultimately judged on their marquee policy initiatives, thus the Hawke/Keating Government is admired for the floating of the Australian dollar and the implementation of the superannuation guarantee, while the Howard Government is well-remembered for the twin peaks regulatory model and the Financial Services Reform Act. It is fair to say the policy efforts of subsequent Governments of both political persuasions have been less admired.
There is a danger that the Turnbull Government will be remembered for what it sought to avoid rather than what it might actually have achieved.
