Treasurer urges ‘cool heads’ on big banks

27/04/2020 Posted by admin

Federal Treasurer Scott Morrison says Australia’s banking and finance sector remains rock solid.Treasurer Scott Morrison has called for calm on the future of Australia’s big banks amid calls from Labor for “root and branch” reform after shocking revelations at a sector wide royal commission.

Mr Morrison on Friday announced tough new penalties for shonky bankers and corporate criminals while insisting Australia’s banking and finance sector remained rock solid.

The treasurer emphasised the hardline new penalties had been in the works for some time and weren’t a direct response to damning evidence aired this week at the commission into misconduct in the financial services sector.

The harsher regime was also announced on day the head of AMP, Craig Meller quit, after the commission heard the wealth manager had lied to regulators and charged customers fees without providing the specified service.

The commission this week also heard some customers of Commonwealth Bank of Australia were still be charged fees after their deaths.

Individuals found guilty of misconduct in the finance sector will now face up to 10 years behind bars, while corporations could be fined up to 10 per cent of their turnover.

“The punishment must always fit the crime and we must not forget that these are not victimless crimes,” Mr Morrison said in Melbourne.

The treasurer said Australians would continue to be “deeply disturbed” by misconduct unearthed by the commission, but stressed the difference between the stability of the financial system and culture of organisations.

However, the new penalties aren’t likely to come into effect until much later this year, when they are approved by parliament, meaning anyone charged from this round of commission hearings is likely to only be punished under the old regime.

Opposition Leader Bill Shorten wants sweeping change and the perpetrators held to account.

“There has to be root and branch reform,” Mr Shorten said in Hobart.

“Various governments have tried to do reforms in the past, but clearly the major financial institutions have had a very arrogant culture.”

Australian Banking Association chief executive Anna Bligh said it had been a “sobering” week for the industry.

“A stronger range of penalties for misconduct is vital to tackling criminal and unacceptable behaviour by individuals and corporations,” she said in a statement.

Mr Morrison flagged more government action once the commission completed its inquiry.

Any measure needed to avoid harming the economy. So far the government has ruled out exempting banks from planned company tax cuts.

Financial Services Minister Kelly O’Dwyer said the civil and criminal penalty reforms are the most significant in decades.

They include increasing the maximum penalty for 19 of some of the most serious offences to 10 years jail for individuals. Corporations would pay 45,000 penalty units or $9.45 million.

These offences include knowingly providing defective disclosure documents to consumers, offering securities without appropriate disclosure and corporate fraud offences.

All currently carry a five-year jail term.

And further 43 offences will be subject to increases in jail terms.

People who continue to manage corporations after being disqualified will be jailed for five years instead of one.

Those who provide false or misleading information to the Australian Securities and Investments Commission will face five years in prison.

The government will also expand ASIC’s ability to ban offending individuals from the financial services sector and strengthen its power to refuse or cancel financial services and credit licences.

Australian Greens leader Richard Di Natale said the reforms didn’t go far enough.

“This is a sector that is rotten to the core and it needs to be reformed,” he said in Melbourne.

Australian Associated Press

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