Watchdog on heels of banks for $10b

BANKS could be forced to speed up $10 billion in compensation payments to customers under powers earmarked for the corporate watchdog.

To mark one year since the banking royal commission’s final report was released, proposed laws for “directions” powers were unveiled yesterday by federal Treasurer Josh Frydenberg.

The laws are among 24 pieces of draft legislation stemming from the inquiry.

The Government is preparing to head off criticism from Labor when parliament sits on Monday that it has not implemented commissioner Ken Hayne’s recommendations.

Banks have been accused of dragging their heels in paying compensation to customers.

The finance sector has been given four weeks to provide feedback on the proposed laws.

Mr Frydenberg is looking to introduce to parliament by the end of the year all legislation for reforms proposed in the wake of the royal commission.

“We are on track to meet the accelerated timetable outlined in our implementation road map,” he said.

The Government has implemented 16 recommendations, while legislation for another eight is before parliament. Of Mr Hayne’s 76 recommendations, 54 were directed at parliament, 12 at regulators and 10 at industry.

Mr Frydenberg said the Government had chosen to make 18 extra commitments to address issues in the report. One is to provide the Australian Securities and Investments Commission with power to give directions to financial services and credit licensees, such as banks, as suggested after a review by Treasury in 2017.

Customer remediation provisions and program costs in the financial services industry have blown out to almost $10 billion, but customers have received less than $1 billion.

The expected bill includes compensation for inappropriately selling consumer credit insurance and add-on insurance in car yards, and for charging fees for services that were not provided.