One of the hottest news stories has been the Royal Commission findings submitted by Commissioner Kenneth Hayne in 1 February 2019 about misconduct in banking, superannuation and financial services.
But if you’re out of the loop lately, here’s an overview: the Royal Commission submitted 76 recommendations to address the troubled financial industry.
Even before the report was finalised, key industry players have been worried about the report. And to date, the report is sending ripples to the financial industry as the proposed changes suggest restructuring rules that are already in place and giving criminal penalties to those who will be proven guilty of misconduct.
Effects of Royal Commission Findings to Key Financial Sectors
Amongst the industries affected include the insurance, banking, superannuation, housing and financial sectors. Some of the key takeaways are placement of capping on commissions paid to insurance dealers, changing laws regarding mortgage broker deals and payments and amending laws on fee arrangements in terms of providing financial advice.
Findings May Affect Stability of Economy
Running after “greedy” people in the banking sector, tightening the rules about commissions, imprisoning people who are guilty of misconduct and giving priority to the consumers may sound like a welcome change for many. But experts say that the Royal Commission findings may lead to a dual effect, causing negative effects to the economy.
One such effect is that the banks may tighten their rules on giving credit to consumers. The rich will generally not be affected by this but some people may be denied credit as well as potential opportunities for growth. Examples of these consumers may be young people looking to purchase/upgrade homes, people borrowing for their education and small businesses that want to expand.
How You’ll Be Influenced By the Findings’ Effects on Financial Sector
The Royal Commission suggests that financial advisors must be greatly regulated by registering to a new disciplinary agency. They must also report compliance concerns. Amending laws that directly affect the financial sector may lead to increased financial advice costs.
And this is worrying financial advisors as this may not only lead to potential job loss but to removal of crucial financial opportunities from many people, especially lower income earners.
What’s bad for the financial sector is also bad for consumers. Proposed improvements in the financial sector are welcome. But the repercussions from the recommendations may lead to a large number of Australians that can’t afford getting sound advice from financial experts.
Importance of Getting Financial Advice and Understanding Financial Planning
Financial advisors and mortgage brokers are feeling the impact of the Royal Commission findings. This may affect education, retirement, superannuation options, buying homes and other aspects that have a large impact on your finances.
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For more on this topic watch James Lynch as he talks with Pamela Anderson from Beyond iWealth to know more about how the Royal Commission findings can affect the financial industry and what this means for your finances today and in the next couple of years.