Banking royal commission: Delays mark two-year anniversary

The banking royal commission recommendations have come under renewed scrutiny this week, with responsible lending practices seen by some legal experts as being even more crucial in the current economic climate. 

To recap, on 1 February, 2019, the banking royal commission recommendations were presented to the government by commissioner Kenneth Hayne. These focused on stronger enforcement of existing banking regulations, supervision of remuneration policies and a crack-down on irresponsible lending practices.

Two years on and 45 out of the 76 recommendations are yet to take effect, with four having been abandoned altogether, according to analysis by Guardian Australia.

A fresh call for action on delayed recommendations is now coming from legal firms like Maurice Blackburn Lawyers. Firm board director, Kim Shaw, said implementing consumer protections is imperative after the last year of economic upheaval.

“The Federal Government has pointed to COVID-19 as the reason for delay on a number of recommendations, but the fact remains that many of these recommendations are now more important than ever in ensuring consumers are properly compensated for harm caused and protected from poor behaviour,” she said.

The maintenance of existing responsible lending laws was one of the first recommendations to be scrapped

At the time, Treasurer Josh Frydenberg said the move was made to “reduce barriers to switching between credit providers, encouraging consumers to seek out a better deal.” The September 2020 announcement was positioned as part of the post-COVID economic recovery plan.

However, Shaw said responsible lending practices are even more essential now.

“The government continues to try and make it easier for banks to lend money and provide credit without further necessary protections – measures that risk causing considerable problems for consumers when they can least afford it,” Shaw said.

While Australia quickly rebounded from the mid-2020 recession as COVID outbreaks were contained, the last 12 months have left many individuals in an uncertain financial position.

According to the Australian Prudential Regulation Authority (APRA), borrowers have deferred loans totalling $51.2 billion due to COVID-19, with home loans accounting for more than $42 billion of those deferrals. 

As deadlines for mortgage holidays approach alongside record highs in mortgage commitments recorded by the ABS, concern over a debt cliff could return.

If you’re struggling to manage your bills, seek out free financial counselling services in Australia.