Banking industry continues with its important reform program

Australia’s
banks have welcomed the Government’s timetable for legislative change following
the Hayne Royal Commission and will work with the Commonwealth to continue
implementing the Commission’s recommendations.

While the
forward agenda for the required legislative changes was announced this morning,
banks are well down the track of implementing recommendations for which they
are responsible to improve customer outcomes and earn back the trust of the
Australian community.

Of the
Commission’s 76 recommendations, 54 were directed to Government and more than
40 of those recommendations
require legislative change. 12 are to be taken forward by the regulators, 10
are for industry to implement – eight of these are specific to the banking
industry.

ABA CEO,
Anna Bligh said: “Since the Final Report was handed down six months ago, banks
have been working to make changes to ensure that the recommendations become
part of their operating fabric.

“Make no
mistake, banks understand what the community and Government expects of them and
are raising their standards to rightly meet those expectations.

“The
recommendations included six changes to the Banking Code. All six are
underway. The ABA has already drafted provisions implementing five of the
changes, had them agreed to by banks and submitted them to the regulators for
approval. These are now on track for full implementation by March 2020,” Ms
Bligh said.

The sixth
change relates to the definition of small business. Consistent with the
Commission’s recommendation, the definition was recently changed in the new
Banking Code to include businesses with fewer than 100 employees and this
measure is now fully operational. The further recommendation to change the
financial threshold from $3M to $5M will be subject to a review that will be
overseen by ASIC who will examine the potential impacts on the provision of
credit to small business. The review is underway and expected to be completed
in early 2021.

“In relation to culture
within banks, many, including the major banks, have already completed reviews.
These banks have also introduced mechanisms for the ongoing tracking of culture
to determine whether actions are having the necessary impact. But banks
understand that effective cultural change is not
going to come about through implementing the Royal Commission recommendations
alone. It will only be achieved by putting the customer at the heart of every
decision our banks make.

“In
addition, all banks continue to review how they remunerate staff, with a focus
on good customer outcomes, not just meeting financial targets,” Ms Bligh
said.

Following
the release of the Final Report, the ABA established a dedicated Royal
Commission Taskforce to oversee the industry’s implementation of the
recommendations. This Taskforce has met six times over the past six months and
will continue to meet regularly to ensure the industry responds swiftly to the
Government’s legislative processes and acts to fully implement the
recommendations.

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