Treasurer Scott Morrison during a joint press conference wirh Minister for Small Business and Assistant Treasurer Kelly O’Dwyer on Wednesday. Photo: Alex EllinghausenAustralia’s banks will cough up $121 million to boost the resources of corporate regulator ASIC and ensure it is a “tough cop on the beat”.
Treasurer Scott Morrison and Assistant Treasurer Kelly O’Dwyer unveiled a package of reforms on Wednesday designed to strengthen the regulator, head off mounting public concerns about bad behaviour at the major banks and push back against Labor’s politically popular pledge to hold a royal commission into the banking sector if it is elected.
A Fairfax-Ipsos poll published on Monday found 65 per cent of voters backed a banks royal commission and the federal government will be hoping the package will allow it to neutralise the issue politically.
“No longer will it be the case that taxpayers will be hit to fund this regulator, this enforcement authority, this cop on the beat. Those whom it’s enforcing the regulations and rules on will pay the price for that,” Mr Morrison said.
The Treasurer and his deputy also launched a stinging attack on the “cynical” opposition leader Bill Shorten, accusing him of wanting “to spend your money to fund his political exercise [a royal commission] which won’t get outcomes for people” and highlighting Labor’s opposition to such an inquiry as recently as March.
“What Bill Shorten is committing to do is spend $50-odd million, $51 million of taxpayers’ money for something that might write a report and might make recommendations, perhaps make these recommendations two years from now. That’s not going to give anyone an outcome,” Mr Morrison said.
But Mr Shorten fired back immediately, describing the proposed reforms as a “political band aid” and asked “do you really, seriously believe that the Turnbull government, in the absence of a royal commission being proposed by Labor, would have magically stumped up $120 million?”
“We proposed a royal commission to get answers. Today the government’s announced $120 million worth of hush money.”
Mr Morrison also warned the banks he will be “furious” if they pass on the costs to customers, pointing out the additional impost was “easily digestible by the banks and must be and should be and I would be furious if I thought this was being sought to be passed on”.
The release of the package comes after the government has been on the back foot for weeks over the issue of bad behaviour at the banks, with up to eight government MPs leaving open the prospect of supporting a royal commission.
Earlier this month, the ASIC launched action against Westpac Bank over alleged rigging of the bank bill swap rate, and it had already launched an action against the ANZ Banking Group for similar behaviour. The Commonwealth Bank has meanwhile been caught up in allegations of unethical behaviour by its insurance arm.
The total package is worth $127.2 million over four years and restores the $120 million cut by the Abbott government in the budget.
The package includes $61.1 million to enhance ASIC’s data analytics and surveillance capabilities, including new technological equipment for the regulator and another $57 million for increased surveillance and enforcement operations in areas such as financial advice, responsible lending and life insurance.
Another $9.2 million will be spent on legal and regulatory reforms, ASIC will be empowered to recruit from the private sector, an additional ASIC commissioner focused on prosecutions will be appointed, chairman Greg Medcraft’s term will be extended by 18 months and a user pays model for ASIC will commence from financial year 2017-18.
In a move designed to help families and small businesses that have been ripped off by misconduct and have had to negotiate the raft of different tribunals and ombudsmen, a panel of eminent persons will, by the end of 2016, examine how to implement a “one stop shop” for consumers.
The government will look to lowering the threshold at which the financial services ombudsman is allowed to examine claims, though legislation will be required to put this in to effect.
The Treasurer dismissed suggestions the recommendations amounted to an admission that ASIC had not been up to the task of regulating the sector and responding to customers complaints.
He said, however, the government was not wearing “rose coloured glasses” about ASIC’s performance, which was why the new measures had been introduced.
Ms O’Dwyer argued that both Mr Shorten, when he was assistant treasurer, and his colleague Chris Bowen when he was treasurer and assistant treasurer had done “precisely nothing” to address concerns about ASIC.
In total, the capability review of ASIC commissioned by the federal government last July made 34 recommendations, with five to government and 29 to the regulator, which has responded with an implementation plan.
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