Now that the 2019 Budget is out, you might be wondering what the ramifications have been for the financial services industry in light of the recent Royal Commission.
Treasurer Josh Frydenberg was light on commentary in his Budget night speech, only making reference to additional resourcing post-Royal Commission, which he said would "strengthen the financial system and deliver better outcomes for all Australians."
Let's go into in a bit more detail:
The Government said it will commit $606.7 million over five years from 2019-19 to facilitate its response to the Royal Commission. The papers say this comprises a "suite of measures that fulfill the Government’s commitment to take action on all 76 of the recommendations of the Royal Commission’s Final Report."
Part of this response focuses on compensation. This includes the design and implementation of a compensation scheme "of last resort" funded by the industry, which will cost $2.6 million over two years from 2019-20.
Next, the Government will provide AFCA with $2.8 million from 2018-19 to "consider eligible financial complaints dating back to 1 January 2008."
Finally, compensation will be paid to consumers and small businesses from "legacy unpaid external dispute resolution determinations," totalling $30.7 million.
Strengthening the regulators
ASIC will be given $404.8 million over four years from 2019-20 to implement a new enforcement strategy and "expand its capabilities and roles in accordance with the recommendations of the Royal Commission," which suggests the Government supports the recommendations made in Hayne's final report with regards to ASIC's scope.
APRA will also be provided with $145 million over four years to "strengthen its supervisory and enforcement activities which will support its response to key areas of concern raised by the Royal Commission, including with respect to governance, culture and remuneration." APRA will also be subject to a capability review, wherein its effectiveness and efficiency will be examined.
Finally, an independent regulator oversight authority will be established, which will assess and report on ASIC and APRA's effectiveness "in meeting their statutory objectives." This will involve an expense of $7.7 million over three years from 2020-21.
Royal Commission taskforce
The Government will also invest $11.2 million in establishing what it refers to as a a Financial Services Reform Implementation Taskforce inside the Treasury "to implement the Government’s response to the Royal Commission, and co‑ordinate reform efforts with APRA, ASIC and other agencies through an implementation steering committee."
Wrapping it up
It appears that the Government is, at this stage, committed to implementing all of the recommendations made in the final Royal Commission report. While the particulars have yet to emerge, it's fair to say Australia's financial regulators are about to expand their scope.
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