Banking Royal Commission's final report handed down last week
12 February 2019
76 recommendations were released last week in the Royal Commission’s Final Report into Misconduct in the Banking, Superannuation and Financial Services Industry, all of which the Federal government and Labor have said they will support and implement.
A summary of the key findings we considered to be most relevant to Boyce clients are as follows:
Farmers and Small Business
The commissioner looked to provide stricter and clearer rules to better protect farmers in times of financial distress such as drought, key recommendations as follows:
- The establishment of a national farm mediation debt scheme where banks ensure mediation occurs soon after a loan is distressed, not as a final measure
- The appointment of administrators or receivers is a remedy of last resort and banks to cease charging default interest where no realistic prospect of recovery
- Banks to ensure agricultural land valuations are independent and that valuations should consider likelihood of external events such as drought and floods and time it may take to sell the land
- Distressed loans to be managed by experienced agricultural bankers to reach an outcome best for the customer and the bank
- No default interest on loans secured by farm land in drought declared areas or other natural disaster
- Lending to small business was largely unchanged as there were concerns that any further regulation may tighten lending for small business. There was a recommendation to expand the definition of small business under the Banking Code to be any business employing fewer than 100 people and turnover up to $5m
Superannuation, insurance, mortgage broking and financial services sectors
These sectors are to be overhauled. Key recommendations as follows:
- Workers to only have one default super fund
- Advice fees are prohibited to be deducted from MySuper accounts
- Fees for super accounts other than MySuper to meet annual disclosure requirements
- No heavy handed and unsolicited selling of superannuation or insurance products
- Commissions to be largely eliminated from the financial sector including mortgage broking, financial planning and insurance sales
- Ceasing the charging of fees for no service
- Mortgage brokers to meet similar requirements as financial planners to put their clients’ interests first (not bank providing the loan)
- Trustees and executives of the superannuation sector to be subject to same oversight as banking executives giving regulators power to curb bonuses and vet appointments
- ASIC and APRA retained but overseen by new independent authority
“From when Mick Boyce founded our firm over 45 years ago, our commitment has always been to act in the best interests of our clients. This philosophy underpins our business and is engrained in our firm’s vision of genuine care for our clients and being passionate about helping them to maximise their wealth,” Managing Director Phil Alchin said.
We feel it is important to clarify that our Boyce Financial Services business accepts no financial incentives to recommend investment products and offers a transparent 'fee for service' structure.
This means our client’s costs for services are limited to:
- An agreed, set fee for the preparation and implementation of a Statement of Advice (SOA)
- A fixed dollar amount, agreed annually in advance, for ongoing investment advice
To read more about our fee structure, click here
If you have any questions about the recommendations that have been made in the Royal Commission’s Final Report, you can visit the Royal Commission’s website by clicking here or you contact your Boyce accountant.