Treasurer Josh Frydenberg has written to the Insurance Council of Australia (ICA) asking for a prompt response outlining “when and how” members will implement Hayne royal commission recommendations.
“It is imperative that ICA members commit to putting customers at the heart of their business, so that the community’s trust in our financial institutions can be restored,” Mr Frydenberg says in a letter to CEO Rob Whelan dated February 12.
ICA says it has already responded to the Treasurer’s letter.
“The ICA will work in both the short and long term with its members to address the royal commission’s recommendations in order to improve outcomes for consumers and set higher standards for corporate behaviour and culture,” spokesman Campbell Fuller told insuranceNEWS.com.au.
Commissioner Hayne recommends amending legislation so parts of industry codes of practice approved by the Australian Securities and Investments Commission (ASIC) are legally enforceable.
Mr Frydenberg says ICA should work with ASIC to have the enforceable provisions designated as soon as practicable after the Government has passed the legislation, and says he also expects the code to be amended so the governance committee can impose sanctions for breaches.
He calls on the industry to address remuneration issues raised by the royal commission.
“To this end, the government expects all your members to review how their front line staff are remunerated on a yearly basis, to ensure that their remuneration does not just focus on what they do, but also on how they do it.”
The Government expects all financial service entities to take steps to assess culture and governance and deal with any problems quickly and effectively.
“Only strong and decisive action of the kind that leads to lasting change will ensure that the misconduct revealed by the royal commission is not repeated,” Mr Frydenberg says.
“That will require not just acting on specific recommendations but reading and taking on board the findings of the royal commission and considering what it means for the sector as a whole and its customers, and not just what it means for the interests of your members.”
Mr Frydenberg sent a similar letter to Financial Services Council CEO Sally Loane.