In a report tabled well after the proroguing of the Parliament, a key parliamentary committee has rejected legislation which would have substantially ended vertical integration in the financial services industry.
The Senate Economics Legislation Committee rejected the legislation put forward by the Pauline Hanson’s One Nation Party which was aimed at protecting bank deposits by ending vertical integration and therefore eliminating cross-selling.
Hanson had backed the legislation in the Senate with a second reading speech which stated: “The vertical integration of the banks providing additional services including financial advice, insurance and superannuation have been shown to be the root cause of rorts, over charging and profit gouging”.
However, both Government and Labor Party senators rejected the bill with the chair of the committee, Victorian Liberal Senator, Jane Hume stating the committee was confident the current legislative protections “are sufficient to ensure that the money held in bank deposits are safe”.
“In support of that conclusion, the committee notes that during 2008-09, no Australian bank collapsed and no deposits were lost despite the worst financial crisis since the Great Depression of 1929-33,” her report said.
Labor members of the committee also rejected the bill noting that neither the Royal Commission nor the Productivity Commission had recommended any structural separation of the banks.
However, their part of the committee report stated: “Labor Senators are determined to ensure that the banking and financial sector is held to account for their actions wherever there has been misconduct or unethical behaviour” and added that they were focused on implementing the recommendations o the Royal Commission to “deliver lasting, comprehensive change to financial services”.
“Labor will fully implement 75 of the 76 recommendations, and will implement the final recommendation, Recommendation 1.3—Mortgage Broker Remuneration, in a manner that achieves the objectives but without harming competition in the retail mortgage market. We are sticking to our tougher, fairer and faster plan to implement its recommendations,” the Labor Senators said.