Australian Financial Services Royal Commission: Final report analysis

  • Legal update

    18 February 2019

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The final report of the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Hayne Commission) was released on 4 February 2019.

We can now share detailed commentary on the final Report from our Australian MinterEllison colleagues.

Who needs to read MinterEllison’s commentary? Why?

The MinterEllison (ME) Commentary should be read by all those operating in or regulating the New Zealand financial services sector, particularly who have any responsibility for an institution’s conduct and culture, including both directors and senior management.

The ME Commentary identifies cross-cutting themes from the Final Report, an analysis of the impact of the Final Report on key topics and MinterEllison’s insights and perspectives on strategies for financial institutions to build sustainable stakeholder value.

Our view: What about New Zealand?

As the ME Commentary points out, the Final Report can be seen as a ‘once in a lifetime’ opportunity to drive future success for the Australian financial services sector though a renewed focus on the areas of trust and governance.  The same is true for New Zealand. The way Australian financial service providers respond to its recommendations is highly likely to inform the approach of their subsidiaries operating in New Zealand.

While the Final Report has not recommended any structural overhaul or fragmentation of the industry, the Final Report will result in change on both sides of the Tasman. The Australian Government has indicated that it will take action on all 76 recommendations in the Final Report, with only the recommendation relating to mortgage broker remuneration not to be adopted as recommended.

The Final Report is also likely to influence forthcoming legislative and regulatory changes here in New Zealand.

The NZ Government will be “looking closely” at the Hayne Commission’s recommendations to see whether they should be implemented here in New Zealand.[1]  The Ministers of Finance and Commerce and Consumer Affairs have announced that they want to see:

  • Clearer duties on banks and insurers to consider a customer’s interests and outcomes, and to treat customers fairly.
  • An appropriately resourced regulator to monitor the conduct of banks and insurance companies, with strong penalties for breaching duties.
  • Changes applied to both banking and insurance, since the issues identified in both are similar, and there are industry overlaps.
  • A strong response to internal sales incentives and soft commissions.

A consultation paper on possible changes to the financial services industry will be released by May this year, with legislation to be introduced later in 2019.[2]  The Financial Services Legislation Amendment Bill (FSLAB) which reforms the NZ financial adviser regime still sits before Parliament, and may be another potential vehicle for change, though we think that would only be suitable for minor adjustments at this late stage.

The Hayne Commission has already triggered a NZ regulator response – the FMA and RBNZ’s recent Banking and Life Insurance Conduct and Culture Reports.[3]  Banks are due to report back to the FMA and RBNZ at the end of March on their actions to address the regulators’ feedback from their Banking Conduct and Culture Report.  The Life Insurers reviewed by the FMA and RBNZ will similarly report by the end of June 2019, including on the detailed gap analysis they will be required to undertake against the Final Report and its findings relevant to insurance and the sales and advice process for insurance.

The Minister of Commerce and Consumer Affairs has said he expects that the banks’ reports to the regulators will show significant measures to ensure customers are back at the heart of decision-making.[4]  That is a core theme from both the Australian Final Report and the FMA/RBNZ’s report: the need to ensure that those operating in the financial services industry have a truly customer-focussed culture.

The Final Report’s strident criticisms of the approach of the Australian regulators, especially ASIC, is likely to raise continuing questions as to the approaches of our own FMA and RBNZ. In particular, ASIC is encouraged in future to litigate rather than seek enforceable undertakings, or other commitments to behavioural change. This may encourage FMA to consider its own approach further.

Finally, it will be interesting to see if, having addressed banks and insurers in New Zealand, there is an appetite on the part of NZ regulators to look at the conduct of other entities that were within the scope of the Hayne Commission in Australia. Our view is all financial service providers should look again at the FMA’s Conduct Guide from 2016, to ensure they are considering its recommendations, even if they are not licensed by the FMA.  And we have yet to see the Commerce Commission’s position – it is ASIC’s counterpart conduct regulator for consumer lending in New Zealand.

If you have any questions in relation to the Hayne Commission’s Final Report or the other Reports mentioned here, please contact one of our experts.


[1] Press Release, “Australian Royal Commission findings concerning, but NZ moves to protect consumers already in train” , 4 February 2019,

[2] Press release, “Govt to act to protect bank, insurance consumers”, 29 January 2019,

[3] See our updates on the FMA/RBNZ’s reports at and

[4] Press Release, “Australian Royal Commission findings concerning, but NZ moves to protect consumers already in train” , 4 February 2019,