Subscribe to Our News Emails!
Keep up to date with regulatory and compliance news
The principles Commissioner Hayne followed in making the recommendations were:
Simplifying the law so that its intent is met
A general recommendation was that, as far as possible, exceptions and qualifications to generally applicable norms of conduct in legislation governing financial services entities should be eliminated. He said the first, and essential, step to take is to reduce exceptions and carve outs.
Where possible, conflicts of interest and conflicts between duty and interest should be removed. Conflicts of interest and conflicts between duty and interest should be eliminated rather than ‘managed’.
Regulators and compliance
The recommendations sought to improve the effectiveness of the regulators in deterring misconduct and ensuring that there are just and appropriate consequences for misconduct.
Culture, governance and remuneration
He concluded that because primary responsibility for misconduct in the financial services industry lies with the entities concerned and those who manage and control them, effective leadership, good governance and appropriate culture within the entities are fundamentally important. And culture, governance and remuneration are closely connected. Supervision must extend beyond financial risk to non‑financial risk and that requires attention to culture, governance and remuneration.
Some recommendations sought to change, or add to, the law, or industry codes of conduct, in ways that will increase protections to consumers from misconduct or conduct that falls below community standards and expectations.
The Government accepted the following recommendations:
The Government said it would “take action” on all recommendations subject to matters raised by the Productivity Commission Report on Financial Sector Competition in respect of mortgage broking.
The immediate agreed changes were:
The Government also agreed to review the payment of trail commissions to mortgage brokers in three years’ time and to remove the point-of-sale exemption of retail dealers from the operation of the Act.
Bright Law helps financial services providers to effectively deal with legal and regulatory changes and pressures and manage risk.