A Coalition backbench plan for a new banking tribunal appears to have been dropped by the Turnbull government, after an expert review found it was not needed.
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In October, Prime Minister Malcolm Turnbull said the government was preparing to set up a low-cost tribunal for victims of poor practices by Australia's biggest banks, amid pressure from Labor for a royal commission, and calls by Queensland Liberal MP Warren Entsch and Nationals senator John "Wacka" Williams for a new consumer-focused tribunal.
After calling the bosses of the big four banks to face parliamentary hearings in Canberra, Mr Turnbull said a new tribunal was a proposal the government was "working towards".
"What we are working towards is having one tribunal that deals with consumer claims in the most cost-effective and speedy way to get these matters resolved," he said.
"This will be real action, this is an example of my government governing.
"Taking action now with these problems now, not kicking them off into the long grass of a royal commission for years and years and hundreds of millions of dollars."
But an interim report from the government's review of dispute resolution in the financial services sector, released on Tuesday, found there was no need for a new tribunal and actually recommended a move away from tribunal structures.
Led by Melbourne University commercial law professor Ian Ramsay, the review recommended a single industry ombudsman to cover financial and credit services, as well as a compensation scheme of last resort for consumers who lose money when companies go bust.
It called for the existing Superannuation Complaints Tribunal to transition to an industry ombudsman scheme.
Financial Services Minister Kelly O'Dwyer told ABC radio the government was instead now focused on providing a single place for consumers to take disputes with the big banks.
"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 said.
"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."
Senator Williams told Fairfax Media he wants "something that is quick, basically cost-free, where people who think they've been hard done by can go and seek justice".
Stressing he had not read the interim report yet, Senator Williams said he wants the body's decisions to be binding and existing compensation caps to be increased from $309,000, consistent with Ramsay's draft findings.
"I don't care what it's called as long as people can seek justice fairly without it costing them an arm and a leg," he said.
Labor's financial services spokeswoman Katy Gallagher said the announcement had "fooled no-one".
"Like all of Malcolm Turnbull's other banking thought-bubbles, the tribunal was only ever intended to distract from Labor's call for a full royal commission into Australia's banks and financial services sector," she said.
Kat Lane, Financial Rights Legal Centre acting co-ordinator, welcomed the recommendation against a tribunal model.
"Tribunals are very poor in terms of outcomes and justice for consumers. Ombudsman schemes are far superior," she said.
But she said more needed to be done to address the systemic problems inside the banks.
"This is a big win for access to justice. It doesn't put to bed the issue of scandals."
The Australian Bankers' Association said it was considering the report alongside a recommendation from a parliamentary committee for a new banking and financial tribunal.
"Given there are two reports to government recommending for and against a tribunal this is something the ABA will be discussing with our members," ABA chief Steven Münchenberg said.
Financial Ombudsman Service Australia welcomed the report and the panel's "evidence-based approach".
A Westpac spokesman was happy with the report's general direction, while a NAB spokeswoman said the bank strongly supported the creation of a single industry ombudsman.
A Commonwealth Bank spokesman said: "We support a one-stop shop for customers who feel they have received a poor outcome from their bank that is simple, low cost and easy for them to access."
The Ramsay review's final report is expected to be handed to government at the end of March.
