Bookmark and Share
Previous article

News Articles

  • Australian banks say they're sorry, but they're still fighting consumer protections
  • By Alan Kirkland
  • 22/11/2018 Make a Comment
  • Contributed by: Andy ( 12 articles in 2018 )
Be Grateful Today!
Click to receive your Free Guide
This week, bank CEOs have faced their latest grilling at the banking royal commission. It's the last chance for the commission to highlight one of the biggest problems at the heart of our financial system: the failure of banks to fix the problems they've created.

While these hearings make for some great viewing, the real test of a royal commission is not the sound and light show — it's what happens next. It will only make a difference if it leads to lasting reform, to stop the harms revealed from happening again.

With the bank's PR teams working overtime this year, you'd be forgiven for thinking that changes abound in the banking sector. However, the recently published submissions to the royal commission tell a very different story.

In Westpac's response to the commission's interim report, the bank opposed the idea that mortgage brokers should act in our best interests, saying it would be "unnecessary" and "problematic". But if we as customers are paying brokers thousands of dollars through commissions, what are we paying them for if not for advice on the best loan?

Every time there's a problem, they're 'sorry'

For years we've seen a similar pattern. Every time there's a major problem in the banking system, big institutions apologise, say they've fixed the problem and promise not to do it again. No legislation is needed, they say.

They spruik self-regulation, touting codes of practice as the solution to problems they cause. The thing is, most of these codes have been written by industry players that have no interest in changing their ways.

At CHOICE, we haven't found of a single example where self-regulation has protected people effectively in the long-term.

Instead, we can point to many examples where self-regulation has failed, and government has had to step in to clean up the mess.

The leading example is the insurance industry's inability to come up with a single, acceptable definition of "flood". This saw many people discover they were uninsured after losing their homes in the devastating Queensland floods of 2010-11.

In the end, the government had to intervene, to define a single word.

Pushing back against consumer protections


When it comes to the most important and necessary changes, the banks, brokers and insurance companies are still fighting every step of the way.

We can see these companies pushing back against consumer protections even as the royal commission is underway.

In December 2014, the government released the report of the major financial system inquiry led by David Murray. At the time, this was described as a "root and branch examination of Australia's financial system" that would help to ensure the system was "resilient, efficient and fair".

The report contained some important recommendations that could have reduced the risk of what we've seen at the commission.

It said that ASIC should have the power to ban or restrict sale of products that are dangerous to Australians. Think of this as the equivalent of the product recalls that we use for dangerous goods like Takata airbags or exploding mobile phones.

Implemented properly, these powers would let the regulator stop the sale of terrible-value funeral insurance or the aggressive sales tactics used in Indigenous communities.

It also said that financial firms should face stronger obligations around how products are designed and distributed.

This would force firms to identify who a banking, investment or insurance product is designed to help, making it easier for us to see where a product is being flogged to people who will never benefit from it.

But four years later, we are still waiting for these laws to be introduced. And the draft laws before Parliament are a weak version of what was proposed in 2014.

Kick lobbyists out of Parliament House


The main reason for this delay and the weaker laws is industry resistance.

While the CEOs and their PR teams are out in public, asking us to believe that they have changed, their lobbyists are working furiously behind closed doors to slow or prevent reform.

There's one thing above all else that we have to make sure happens after the royal commission.

We need to make sure the big banks don't water down the reforms the hearings have revealed we need.

To do that, we need to kick their lobbyists out of Parliament House and stop giving them "one more chance" with self-regulation.

Alan Kirkland is chief executive of consumer advocacy organisation CHOICE.

Source: https://www.abc.net.au/news/2018-11-22/banking-royal-commission-choice-consumers-banking-customers/10500314


     3+3= 
    (Note: If wrong - comments will not be posted)
    Footnotes:

    1Will not be visible to public.
    2Receive notification of other comments posted for this article. To cease notification after having posted click here.
    3To make a link clickable in the comments box enclose in link tags - ie.<link>Link</link>.

    To further have your say, head to our forum Click Here

    To contribute a news article Click Here

    To view or contribute a Quote Click Here

    Hosting & Support by WebPal© 2019 f4joz.com All rights reserved.