Following the Royal Commission’ investigation into Australia’s financial industry, the country’s banks have welcomed the Government’s timetable for legislative change and will work with the Commonwealth to continuously carry out the Commission’s recommendations.
Although the forward agenda for the required legislative changes has only been announced yesterday, banks have already been moving forward in implementing recommendations in order to improve client outcomes and win back the trust of Australians.
Of the 76 recommendations, 54 were directed to Government and over 40 require legislative change. Twelve of the recommendations are to be taken forward by the regulators, while ten are for industry to implement – eight of which are specific to the banking industry
“Since the Final Report was handed down six months ago, banks have been working to make changes to ensure that the recommendations become part of their operating fabric,” Australian Banking Association (ABA) CEO Anna Bligh said in a statement.
“Make no mistake, banks understand what the community and Government expects of them and are raising their standards to rightly meet those expectations.”
Bligh added that, as six of the recommended changes to the banking code are already underway, ABA had already drafted provisions to implement five of the changes. These five changes have been submitted to regulators for approval and are on track to be fully implemented by March 2020.
The sixth change relates to the definition of a small business. Consistent to the Commission’s recommendation, the new banking code’s definition includes businesses with less than 100 employees – and the measure is now fully operational.
ASIC is currently overseeing the ongoing review of further recommendations to change the financial threshold from $3m to $5m and examining its potential impact on the provision of credit to small businesses. The review is expected to be completed in early 2021.
Bligh said that many banks, including major ones, have already completed their review on their respective banking cultures. These banks have also introduced mechanisms to track whether the recommendations are having the appropriate impact on their culture.
But banks, she added, know that “effective cultural change is not going to come about through implementing the Royal Commission recommendations alone. It will only be achieved by putting the customer at the heart of every decision our banks make.”
“In addition, all banks continue to review how they remunerate staff, with a focus on good customer outcomes, not just meeting financial targets,” she said.
After the release of the Final Report, ABA formed a dedicated Royal Commission Taskforce to oversee the industry’s implementation of recommendations. Over the past six months, the taskforce has met six times and will continue to meet regularly to make sure the industry responds quickly to the Government’s legislative processes and fully implements the recommendations.