The Turnbull Government will ditch plans for a banking tribunal and will instead look to beef up the powers of the ombudsman to look after the job of cleaning up the sector.
An expert review of the banking tribunal proposal has found it unnecessary, and it comes after Malcolm Turnbull called in the bosses of the big four banks to face a parliamentary hearing in Canberra earlier this year.
Mr Turnbull had been aiming to set up one single tribunal for victims of poor practices from banks to have their grievances resolved.
It was the Turnbull Government’s response to building pressure, especially from Labor, to launch a Royal Commission into the banking sector, a Royal Commission Mr Turnbull says would be too long, too expensive and wouldn’t result in enough improvement.
An interim report from Melbourne University’s professor Ian Ramsay was released this week however, and recommends a move away from tribunals in banking sector dispute resolution.
Instead, the review recommends having a single industry ombudsman to cover financial credit services and for a compensation scheme for customers of financial institutions that collapse.
Financial Services Minister Kelly O’Dwyer explained the Government’s move towards a single place for dispute resolution.
“When the Prime Minister was talking about a ‘tribunal’ he was talking about a ‘small-T’ tribunal, which was a catch-all for having a one-stop consumer complaints stop,” she told ABC radio.
“One is far more legalistic, which means it is probably less consumer friendly and that is a ‘big-T’ tribunal.”
“That makes it more difficult for consumers to engage, which is what the report has found.”
Most members in the financial sector want to see something that works for consumers where they can seek justice without it costing them an exorbitant amount of money to do so.
The Australian Bankers’ Association said it was comparing the new report for an ombudsman with a separate parliamentary committee recommendation for a new banking tribunal and weighing up which it thought was the best option.
The ABA’s boss Steven Munchenberg said they will be discussing the two reports with their members.