Malcolm Turnbull and his treasurer, Morrison, have gone for centuries with these demands – denying there was a problem. But when some government backbenchers threatened to support an opposition motion for an inquiry, Turnbull had no choice but to back down.

The hearings of former High Court Judge Kenneth Hayne revealed countless cases of financial “misconduct” and received months of media coverage.

Malcolm Turnbull and his then treasurer Scott Morrison have repeatedly ignored calls to investigate the banks.Credit:Alex Ellinghausen

Hayne’s final report tabled just months before 2019 election. Morrison’s successor as treasurer, Frydenberg, immediately announced that he was “taking action on all 76 recommendations” and “going further.” This seemingly wholehearted acceptance of the recommendations defused banking misconduct as a problem in the election campaign.

It has now been two years since Frydenberg joined. Professor Kevin Davis of the University of Melbourne said the government has yet to implement 44 of the commission’s recommendations and has turned its back on five key reforms.

Frydenberg initially accepted the proposal to ban the practice of mortgage brokers being paid by lending banks with a commission based on a percentage of the loan size. But, after industry lobbying, Frydenberg left it in place, replacing it with an obligation that brokers act in the best interests of their clients.

Hayne’s very first recommendation was that the existing “responsible lending obligation” – which makes it illegal to offer credit that would not suit a consumer based on their needs and ability to make payments – not be modified.


But last September, Frydenberg announced that the bond had cost lenders dearly and was delaying loan approval. The current principle of “pay attention to the lender” would be replaced by a “responsibility of the borrower”. Legislation to achieve this is awaiting Senate approval.

It is a “reform” that has been welcomed by the banks, but vigorously opposed by Davis, various legal academics, consumer groups, the Financial Rights Legal Center, Financial Counseling Australia – and my fellow Salvos believers, including Moneycare financial advice the service is offered at approximately 85 locations across Australia.

Like all detractors, the Salvos see the “asymmetry of knowledge and power” between consumers and financial service providers. The credit products offered have become increasingly complex and opaque. “Our experience is that understanding these products requires an above average level of literacy and financial education,” they say.


The proposed reduction in the scope of responsible lending obligations would reduce regulatory oversight and thereby increase risk to borrowers. “Our overwhelming evidence [from] providing financial advice in Australia for 30 years is that credit remains too easily accessible and this has devastating consequences for the people we support …

“For people who are already experiencing or are at risk of experiencing financial difficulties, easier access to credit can mean they will be caught in a cycle of increasing debt. This has important implications for physical and mental health. “

I’m afraid the Salvos are right.

Ross Gittins is a regular columnist.

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