A year on from the Hayne royal commission, has anything changed?

Part of the spin in the press release was that by mid-2020 close to 90 per cent of the recommendations will have been implemented or have legislation before the Parliament.

This is a big suite of reforms, some more complex than others, so it is hard to understand why stakeholders have been given just 28 days to have their say.

It means some will go through with little scrutiny. Others will be targeted by the lobbyists and watered down before it is enshrined into law.

Whatever the case, much of the legislative agenda for 2020 will be dominated by royal commission recommendations, which is far from ideal.

The Australian Banking Association boss Anna Bligh got the ball rolling urging that consultation on the legislation needs to be “thorough and robust” to avoid “knee-jerk” responses that could create a “ripple effect across the entire economy”.

But the effectiveness of the recommendations will depend on the final legislation, the resourcing and the people involved.

Reputations were slayed, trust battered, some organisations collapsed, senior executives lost their jobs

For instance, as part of the package of proposed legislation Frydenberg released an exposure draft to establish a Financial Regulator Assessment Authority, which had been a recommendation of the final report. Hayne made the recommendation on the basis of the weak record the regulators had shown in regulating the sector.

The exposure draft says the oversight body is designed to assess the effectiveness of the banking and insurance regulator APRA and the corporate regulator ASIC, and to undertake capability reviews when requested by the minister.

But at the end of the day its effectiveness will depend on the resources and board constitution.

Andy Schmulow, a senior law lecturer at Wollongong University who worked at APRA in 2013 and has been critical of the regulators, warned that the board needs to be insulated from capture to ensure it didn’t interfere with the decisions of the regulator. “It needs to protect itself against cognitive biases that may come from a too-dominant chair that serves too long; ensure that appointments are for fixed terms (to further insulate against capture); that appointees are not personally or materially conflicted; that they serve staggered terms to ensure continuity and corporate memory.”

Besides grappling with the raft of draft legislation just released, the government has called on stakeholders to give feedback on another Hayne recommendation, an industry-funded, forward-looking compensation scheme of last resort.

The scheme was designed to protect customers who had been ripped off but were unable to receive compensation because the financial advice business had collapsed.

But it is causing some angst among industry participants who are worried such a scheme will result in some of the smaller operators gaming the system by offering shoddy advice then closing their operation and leaving the industry to pick up the tab.

The industry has a lot on its plate as it recalibrates after a year of scrutiny from the royal commission. Reputations were slayed, trust battered, some organisations collapsed, senior executives lost their jobs and billions of dollars in compensation is now being repaid.

For years these once venerable institutions got away with ripping off millions of Australians through various means. At the heart of it was greed, hubris and weak regulation.


The royal commission was badly needed but it never went far enough. It was too short, the terms of reference missed some key areas such as the role of auditors and the final recommendations didn’t go to the heart of some of the problems.

Those looking for massive structural change and heads on sticks would have been sorely disappointed.

Indeed a year on some optimists are still hopeful that after all the evidence heard during the royal commission of theft and illegal and unethical behaviour such as deliberately lying to the regulator, taking fees for no service and misleading the Financial Ombudsman Service, someone may be charged. It may be a long wait.

The question that needs to be asked is whether behaviours have changed. Are all the apologies empty or something more meaningful? Have institutional investors done enough to support the reforms given a lot of the problems were driven by targets and bonuses, which they generally support?

One of the biggest fallouts from the royal commission has been the financial advice industry. The banks have pulled out, grandfathered commissions have been banned and a code of ethics has been introduced.

But is it enough? The banks may have left financial advice and the associated conflicts of vertical integration but new players have stepped in to fill the space. Others such as IOOF with its chequered history have exploited the opportunities.

The new reality is a big increase in the number of licencees operating and fewer insurers offering financial advisers professional indemnity insurance, which is a ticking bomb.

It means the government – and the regulators – need to be on high alert to ensure the correct protections are in place for consumers. If not, it will be back to the drawing board.

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