19 August 2019

Taking action on the Banking, Superannuation & Financial Services Royal Commission - implementation roadmap

The Morrison Government has today released its Banking, Superannuation and Financial Services Royal Commission Implementation Roadmap setting out how the Government will deliver on its comprehensive response to the Royal Commission, Restoring trust in Australia’s financial system.

In the Government’s response, released in February this year, we committed to taking action on all 76 Royal Commission recommendations and, in a number of key areas, going further.

This commitment represents the largest and most comprehensive corporate and financial services law reform package in the three decades since the Corporate Law Economic Reform Program (CLERP) in the 1990s.

Australia’s financial services sector, in terms of share of GDP, is the single largest sector in the economy at around 10 per cent. The sector employs around 440,000 people and contributed $163 billion to the Australian economy in 2017/18. It is also critical enabler of activity across the economy and is fundamental to the financial security and wellbeing of every Australian.

In the Royal Commission’s Final Report, Commissioner Hayne made 76 recommendations for reform. Of these, 54 recommendations were directed to the Government, 12 to the regulators and 10 to the industry. Of the 54 recommendations directed to the Government, over 40 require legislation.

In addition to the Commission’s 76 recommendations, the Government in its response announced a further 18 commitments to address issues raised in the Final Report.

Since the Final Report was received, the Parliament has sat for 21 days and the Government has implemented 15 of the commitments it outlined in response to the Royal Commission’s Final Report. This comprises 8 out of the 54 recommendations that were directed to the Government and 7 of the 18 additional commitments the Government made as part of its response. Significant progress has also been made on a further 5 recommendations with draft legislation either introduced to the Parliament, released for comment or detailed consultation papers issued.

The need for change is undeniable, and the community expects that the Government’s response to the Royal Commission will be implemented swiftly. 

Excluding the reviews that are to be conducted in 2022, under the Implementation Roadmap:

  • by the end of this year, more than 20 commitments, around one third of the Government’s commitments, will have been implemented or have legislation before the Parliament;
  • by mid 2020, more than 50 commitments, close to 90 per cent of commitments, will have been implemented or have legislation before the Parliament; and
  • by the end of 2020, remaining Royal Commission recommendations requiring legislation will have been introduced.

For measures contained in legislation introduced into the Parliament before 1 July next year, the Government expects the majority to commence by 1 July 2020 or Royal Assent.

Given its scale and complexity, this represents an unprecedented response.

It demonstrates the Government’s commitment to strengthening consumer protection laws and empowering Australia’s financial regulators to enforce the law.

In comparison, the Future of Financial Advice Reforms (FOFA), took almost 23 months from when the Parliamentary Joint Committee on Corporations and Financial Services tabled its report to when legislation was first introduced.

There are currently 24 streams of work under way in Treasury that are progressing the Government’s commitments to the Royal Commission.

An additional $9.3 million will be provided to the Treasury and the Office of Parliamentary Counsel this year to ensure that the Government’s timetable can be met, in addition to the $12.1 million that was already provided in this year’s Budget.

It is anticipated that giving effect to the Implementation Plan will take up 75 per cent of Treasury’s legislative agenda over the next year with the Treasury legislative program typically representing 25 per cent of the total Government legislative program.

In three years’ time, the Government will establish an independent review to assess the extent to which changes in industry practices have led to improved consumer outcomes and the need for further reform.

There will be a similar review into the regulators’ actions at the same time, which will be undertaken by the new financial regulator oversight authority, recommended by the Royal Commission and agreed to by the Government.

Implementing the recommendations of the Royal Commission are critical to restoring trust and confidence in Australia’s financial system and part of the Morrison Government’s plan for a stronger economy.

The Implementation Roadmap is available via the Treasury website.