NAB chairman Ken Henry leaves the Royal Commission into Misconduct in the Banking,Superannuation and Financial Services Industry.Credit:Wayne Taylor
Yet in the days following the federal election we saw a rise in the share market of $33 billion,led by huge increases in the value of Australian banks. What should we make of this? Does this point to a belief that the Morrison government will be softer on banks than Labor would have been?
While short-term changes in share markets have a lot of causes,there is no doubt that investors in large banks felt buoyed by the re-election of the Coalition government.
But there’s more to a community than investors. And memories aren’t that short:the fallout from the royal commission is still working its way through the economy. Placing fairness at the centre of the corporate sector is critical.
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The new government will need to work to address the broader community’s concerns that big corporates need to change direction. And they’ll also need address other more egregious practices in the finance sector that continue to fall under the radar.
So what should the re-elected Morrison government be doing to ensure Australian corporates treat their customers and the community fairly?
First,implementing the recommendations from the banking royal commission. Commissioner Kenneth Hayne made 72 recommendations and many of these require legislative change. Priorities include banning unsolicited selling of insurance and superannuation,requiring mortgage brokers to act in our best interests,applying unfair contract term prohibitions to insurance,and ensuring car yards and retailers that offer loans are appropriately licensed. These reforms all respond to long-standing problems and should not be difficult for the government to legislate early in this term of Parliament.
A key finding of the royal commission final report was the way in which commissions and incentive arrangements operate to put profit ahead of customer interests. Reforms to abolish and limit commissions and to create a marketplace where financial products are bought not sold,are also imperative.