High Court justice and royal commissioner, Kenneth Hayne, has declared the time has come to overhaul the Australian financial services sector.
In his damning final report into the industry which touches almost every Australian, Justice Hayne unveiled 76 recommendations which will challenge key aspects of banking, superannuation, financial advice and the rural lending industries.
Declaring that "choices must now be made", Justice Hayne has also referred some of the nation's biggest company names to regulators for possible criminal or civil action for the way they treated their customers.
"The damage done by that conduct to individuals and to the overall health and reputation of the financial services industry has been large," he wrote.
"Saying sorry and promising not to do it again has not prevented recurrence. The time has come to decide what is to be done in response to what has happened.
"The financial services industry is too important to the economy of the nation to allow what has happened in the past to continue or to happen again."
The following are some of the key recommendations made by Justice Hayne.
Require mortgage brokers to act in the best interests of the intending borrower, not the bank providing the loan. Breaching this law would result in a fine.
Borrowers rather than lenders should pay the mortgage broker for their services
Lenders would be banned from paying trail commissions to mortgage brokers for new loans.
Expand the Banking Executive Accountability Regime laws to track those responsible for any breach of lending laws.
Bank treatment of farmers and those with poor English skills:
Establish a national scheme to mediate farm debts.
Banks would be barred from charging dishonour fees on basic accounts.
Amend the banking code of conduct so people in remote areas or those with poor English skills can access and undertake banking.
Require banks not to charge default interest on loans secured by farm land in an area declared to be in drought or subject to other natural disaster
Have banks ensure managers of distressed farm loans are experienced agricultural bankers. Recognise that appointment of receivers on a farm loan is a "remedy of last resort"
Car dealers should no longer be exempt from national consumer credit protection laws
Create a new disciplinary system for financial advisers, with all advisers required to be registered. A single disciplinary body would oversee the system.
Grandfathered provisions of conflicted remuneration should be repealed as soon as possible.
The current cap on commissions for life risk insurance products should be reduced and ultimately set at zero.
All remaining conflicted remuneration exemptions should be referred with a view to banning them outright
All banking licence holders be required to report "serious compliance concerns" about individual financial advisers to ASIC on a quarterly basis.
A single default super fund for all workers. People would be "stapled" to a single default account.
Ban on advice fees deducted from MySuper accounts
Advice fees for non-MySuper accounts would be prohibited in most cases
Heavy handed selling of superannuation to be abolished
Referral to ASIC and APRA for possible action:
Justice Hayne has referred to regulators a long list of companies for possible criminal or civil action. The 24 companies include Suncorp, ANZ, NAB, CommInsure, Allianz, AMP and ClearView.
Heavy handed selling of insurance products would be banned.
Funeral expense insurance policies would be defined as a financial product, brining it under the oversight of ASIC
Impose a cap on the commission that can be paid to car sellers for add-on insurance products
Handling and settlement of insurance claims would be defined as a financial service
Culture and governance:
All financial service companies would review at least once a year the design and features of their remuneration systems for front line staff
All financial companies should assess their own culture and governance
Retain ASIC and APRA but have them overseen by a new independent authority which would assess the two regulators to ensure they are carrying out their responsibilities
ASIC overhauls its approach to enforcement, with a focus on court action rather than infringement notices.
ASIC should continue its annual reporting of breaches of financial service regulations but in future name the companies rather than just the type of breach
For those hurt by the finance sector:
There should be a change to the current way community legal groups helping those with financial complaints are funded, moving it to a more "predictable and stable" system.
Compensation scheme of last resort for those unable to financial recompense from their institution.