The Royal Commission risks becoming “an inquiry looking for something to inquire about” should it turn its eye on the regulators, the Minister for Revenue and Financial Services has said.
Speaking at the Financial Services Council Leaders Summit on 26 July, Ms O’Dwyer rejected Shadow Treasurer Chris Bowen MP’s call for an inquiry into the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulatory Association (APRA).
Ms O’Dwyer argued that such a review would only reflect the opposition party “moving the goalposts” of financial inquiries towards fintechs and the regulators, adding that a Commission into those areas would constitute an “endless talkfest”.
She added: “Already the Government has strengthened the resources of the Australian Securities and Investments Commission; reformed the conflicted remuneration of the life insurance advice sector; and strengthened the professional standards of financial advisers by setting up the new Financial Adviser Standards and Ethics Authority under the Chairmanship of Cathy Walter AM.
“We know that many Australians have felt their complaints of poor conduct in the sector have not been examined and progressed in a satisfactory manner, if at all. This has undermined trust and confidence in the sector and had a detrimental impact on people's lives.”
‘Next stage’ for AFCA
Addressing the unsatisfactory complaints process, Ms O’Dwyer announced a transition team to ensure that the Australian Financial Complaints Authority (AFCA) is operational by 1 July 2018.
AFCA, the “critical one-stop shop for external dispute resolution”, was recommended by the Ramsay Review and will serve as an amalgamation of the Financial Ombudsman Service, Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
Ms O’Dwyer told the summit that a transition team was being brought in to lead AFCA, headed up by former Reserve Bank of Australia (RBA) assistant governor Dr Malcolm Edey.
“Dr Edey is widely respected both internationally and domestically for his extensive knowledge in a broad range of economic fields," Minister O'Dwyer said. "Dr Edey has been a member of the RBA’s senior policy committees and was deputy chairman of the Payments System Board.”
Provided the legislation to create AFCA passes parliament, the transition team will focus on overseeing the operational transition from the current schemes and bodies to AFCA, while consulting “extensively” with the Financial Ombudsman Service, the Superannuation Complaints Tribunal, the Credit and Investments Ombudsman as well as industry and consumer stakeholders.
According to Ms O’Dwyer, AFCA will provide a “smoother” EDR process as “there will be no longer be uncertainty or confusion about which body has jurisdiction to hear a particular dispute”.
“Where complaints involve multiple issues, or multiple financial services providers, resolving those complaints will be smoother.”
The minister added: “AFCA will also be able to hear disputes of a significantly higher value, which provides greater access, so more consumers and small businesses can have their case heard, and receive fair compensation if they have wrongfully suffered a loss.
“Taken together, this major reform means that more consumers and small businesses will enjoy a free, fast, fair and binding dispute resolution service.”
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