Labor will commit today to the full implementation of all but one of the 76 recommendations of the Hayne royal commission, and flag going further with an overhaul of the financial regulatory system.
In a speech to the Committee for Sydney, opposition financial services spokeswoman Clare O’Neil will identify the response to the banking royal commission as a broader opportunity for reform.
One option regarding a regulatory overhaul could be the establishment of a special prosecutions unit if the Australian Securities and Investments Commission could not cope with an increased enforcement role as well as prosecuting companies and individuals for behaviour exposed by the banking royal commission.
Ms O’Neil says Commissioner Kenneth Hayne’s criticisms of the complexities and overlaps in the regulatory system raised “big issues” and warranted an examination of simplifying the laws and structures.
“The royal commission’s 76 recommendations are our priority, but Commissioner Hayne has suggested some further work on these structural questions,” she will say.
“I’m not foreshadowing major law reform without further consultation. Commissioner Hayne has asked us to have a conversation about complexity, about carve outs, about whether the law clearly reflects community intent, about whether our regulators are capable of doing what we are asking of them.
“That is a conversation we are up for.”
Until now, Labor has pledged full support for a handful of recommendations and declared only “in-principle” support for the rest.
Ms O’Neil will today promise that Labor, if elected, will implement 75 in full as recommended by Commissioner Hayne.
Like the government, Labor has baulked at the recommendation to make the borrower, not the lender, pay upfront fees to mortgage brokers. Instead, Labor will limit the upfront fees to 1.1 per cent of the draw down component of the loan.
“But for the rest of the recommendations, Labor will fully implement them,” she will say.
Labor has also proposed measures beyond Hayne, such as a boosted compensation scheme and a new bank tax to fund financial counsellors and domestic violence assistance. It has also defied Hayne by allowing its compensation scheme to look at previously settled cases.
The government has issued its response to all recommendations but in about a dozen cases, the support has been qualified. It has also resisted a push by Labor to start legislating change before the election, saying the bulk of the 40 recommendations, which require legislation, should be done later in the year.
Ms Neil will warn that unless the recommendations are implemented as quickly as possible, “we’re showing the community that we are happy to ignore their incandescent rage at some of the conduct, which has been uncovered.
“The public are not going to forget. They are just going to get more angry.”
Ms O’Neil will also say cultural change and restoring integrity are as important as law reform because changing laws cannot solve “all the problems we are concerned with”.
She will accuse the government of “simply sowing the seeds for the next royal commission” by dragging its feet. And there are more dire consequences if trust in banks, politics and other institutions continues to erode.
“To not respond – or to squib the response, as I think the government has done – is an option that leads us down a path towards Trumpism, and Brexit. That is where the public go when the institutions they are asking to change refuse to do so.
“One of our bad habits in Australia is assuming that what is happening here is unique. And it’s not. Financial institutions are facing similar issues in many countries around the world.”