✦ Plain-English Summary

Financial Sector Reform (Hayne Royal Commission Response) 2020

What it does

This bill fixes problems in Australia's banking, insurance and superannuation industries that were exposed by the Hayne Royal Commission inquiry. It makes financial companies follow stricter rules about how they treat customers, what they can charge, and how they handle complaints and misconduct.

Why it matters

Banks, insurers and super funds have been caught misleading customers and charging unfair fees. These changes are meant to stop that happening and make it easier for regulators to catch wrongdoing before it harms people's savings and investments.

Key details

Insurance and commissions: Insurance companies can't automatically sell add-on insurance (like payment protection) with other products — customers have to actively choose it. Commission caps are introduced to stop salespeople being paid huge amounts to push unsuitable products.

Superannuation trustees: Trustees managing your super must focus only on your retirement, not other interests. ASIC and APRA (the regulators) get clearer powers to oversee super funds properly.

Breach reporting: Financial companies must now report misconduct and wrongdoing to regulators within set timeframes, with clearer penalties for breaching the rules. They also have to share information about dodgy workers so they can't just move to another company to cause more harm.

Official Description

Introduced with the Corporations (Fees) Amendment (Hayne Royal Commission Response) Bill 2020, the bill amends the: Corporations Act 2001 and National Consumer Credit Protection Act 2009 to: strengthen the existing voluntary code of conduct framework by enabling the Australian Securities and Investments Commission (ASIC) to designate enforceable code provisions in approved codes of conduct which, if breached, may attract civil penalties; and establish a mandatory code of conduct framework for the financial services and consumer credit industry through regulations, with the ability to designate certain provisions of civil penalty provisions; Insurance Contracts Act 1984 to: limit the circumstances in which an insurer can avoid a life insurance contract on the basis of non-fraudulent misrepresentation or non-disclosure by an insured; and replace the duty of disclosure for consumer insurance contracts with a duty to take reasonable care not to make a misrepresentation; Australian Securities and Investments Commission Act 2001 to: implement an industry wide deferred sales model for the sale of add-on insurance products; and formalise ASIC's meeting procedures; Corporations Act 2001 to: provide for the interaction of the deferred sales model with the anti hawking obligations; make claims handling and settling a financial service; and ban the hawking of financial products; Australian Securities and Investments Commission Act 2001 and National Consumer Credit Protection Act 2009 to cap the commission that may be paid in relation to add-on risk products supplied in connection with the sale or long-term lease of a motor vehicle; Insurance Act 1973 to restrict the use of the terms 'insurance' and 'insurer'; Superannuation Industry (Supervision) Act 1993 to: impose a new condition on licences held by a body corporate trustee of a registrable superannuation entity; and amend the roles and responsibilities of superannuation industry regulators; Australian Securities and Investments Commission Act 2001 and Corporations Act 2001 to extend the financial services licensing regime to cover a broader range of activities undertaken by superannuation trustees regulated by the Australian Prudential Regulation Authority (APRA); Corporations Act 2001 , National Consumer Credit Protection Act 2009 and National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 to: impose new obligations on financial services licensee and credit licensees in relation to reference checking and information sharing, and breach reporting and remediation; and clarify and strengthen the breach reporting regime for financial services licensees and introduce a breach reporting regime for credit licensees; and Australian Prudential Regulation Authority Act 1998 and Australian Securities and Investments Commission Act 2001 to require APRA and ASIC to cooperate and share information with each other, including requiring them to notify each other when they reasonably believe there may be material breaches of each other's legislation. Also makes consequential amendments to five Acts.

Committee Referrals

Senate Standing Committee for the Scrutiny of Bills

No formal division recorded

This bill passed by voice vote — parliament agreed without calling a formal count. A division is only recorded when a member explicitly requests one.

No votes yet.

No votes were recorded for this bill.