Labor leader says failure to act will show Coalition ‘putting the interests of the big banks’ first

This article is more than 1 year old

This article is more than 1 year old

Bill Shorten says Scott Morrison must schedule two extra sitting weeks in March to fast-track the legislative changes recommended by the banking royal commission, saying failure to act quickly will show voters the government is “putting the interests of the big banks ahead of them”.

As Morrison signalled executives of the National Australia Bank should reflect on Kenneth Hayne’s “sharp” assessment of their conduct, Shorten wrote to the prime minister on Tuesday, declaring it was critical the reforms be legislated as soon as possible, and demanding two extra sitting weeks be scheduled in March.

“After taking so long to recognise a royal commission was necessary, Australians will not accept any further delaying tactics from your government,” the Labor leader said.

Big four banks’ shares climb despite Hayne royal commission report Read more

But a spokesman for Morrison dismissed the call, saying there was already legislation in the parliament dealing with substantive issues flagged by the royal commission, “but Bill Shorten and Labor have been fighting it tooth and nail”.

“We won’t be lectured by Bill Shorten who still hasn’t outlined which recommendations Labor would implement,” the spokesman said.

The intensifying political brawl, and Morrison’s pointed public rebuke to National Australia Bank executives, comes as big bank stocks surged as investors and their advisers absorbed the recommendations of the Hayne report and the government’s response.

The positive market reaction, with the major banks up between 3.9 and 7.4% in the day’s trade, suggests the Hayne report has been greeted with relief, and it suggests the financial services sector feared a much more radical overhaul.

While the sharemarket fallout for the banks was positive, it was a different story for mortgage brokers, with the market moving in the opposite direction.

As a consequence of the royal commission, brokers will be subjected to a “best interests” duty and trailing commissions will be banned from July 2020 – but the Morrison government has stopped short of adopting a users pays recommendation where borrowers, not lenders, should pay mortgage brokers a fee for acting in connection with home lending.

Labor has blasted the government’s failure to implement that recommendation in full. Reports in December suggest the assistant treasurer, Stuart Robert, gave the broking industry some comfort last December, ahead of the final Hayne report, with Robert giving an impression that current practices didn’t need to change much.

Despite winning the partial reprieve, the broking sector is furious with the Hayne recommendations. The Finance Brokers Association of Australia managing director, Peter White, declared on Tuesday the reforms “would send Australia back to the dark ages where a few banks held all the power”.

With senior government figures under pressure to apologise for failing to call the royal commission sooner, the former prime minister Malcolm Turnbull also surfaced to note the government “should have got on with it earlier”.

While the treasurer, Josh Frydenberg, declined to apologise in several interviews, Morrison, visiting flood damaged areas in Townsville, repeated a formulation about regret that he offered last year.

He told reporters he “expressed my regret last year and I meant it” but he said the government had “just got on” with setting up the royal commission, and ensuring the recommendations were implemented.

With the National Australia Bank also under significant pressure, given Hayne’s scathing assessment of the chief executive, Andrew Thorburn, and the chairman, Ken Henry, the prime minister also pointed the finger squarely at the executive team.

The banking royal commission report should be a mark of shame for the sector | Greg Jericho Read more

“Commissioner Hayne was pretty sharp in his assessment and I think that gives them a lot to reflect on.”

Morrison said he would be so “bold” as to suggest their positions were now untenable but he repeated the observation that Hayne had been “sharp”.

With the government keen to draw a line with the final report, and move on, Labor is also intensifying criticism about the government’s response to the final report.

The shadow financial services minister, Clare O’Neil, says the government is keen to convey an impression that it has accepted all the Hayne recommendations, but closer analysis of the government response suggests that is not the case.

As well as the partial reprieve for mortgage brokers, she points to equivocal responses in relation to recommendations that the law be amended to provide Asic with additional powers to approve and enforce industry code provisions, and a lack of commitment to duty of care recommendations for the insurance industry.

O’Neil says the government has not committed to replace the current duty of disclosure with a duty to take reasonable care not to make a misrepresentation, as recommended by Hayne.

“That is the substance of this recommendation, and the government has indicated that they will not do it,” she said.