Ernst & Young (EY) said the royal commission final report is set to deliver significant changes to the Australian financial sector, and urged financial institutions to take a proactive approach in responding to the proposed reforms.
“The final report delivered a pragmatic, common-sense conclusion to the royal commission proceedings and, with the government committing to take action on all 76 recommendations, financial institutions should be proactive in considering their implementation plans,” said Graeme McKenzie, EY Oceania Financial Services Leader.
The global accounting firm noted the report didn’t recommend any dramatic changes, and instead sought to simplify legislation “by removing exclusions, amplifying accountability, using remuneration as a critical tool for directing behaviour and conduct, building on existing industry tools and constructs, and strengthening the regulators [ASIC and APRA] to allow for increased adherence and enforcement.”
EY noted in particular that recommendations to cease ‘hawking’ and cross-selling of products and services will significantly change insurance, superannuation, and banking distributions models, and urged the industry “to get on the front foot and ensure they are working to adopt them ahead of any formal deadlines.”
“The sector now needs to begin the important task of rebuilding trust, particularly in light of increasing community, government, and regulatory expectations around key issues such as culture, leadership, conduct, and governance,” McKenzie said. “Management and boards need to consider that, while they are busy planning for and executing these changes, they also need to communicate more actively, often and openly with both regulators and shareholders.”