Thursday, 27 October 2016
Are We Any Closer To Having A Banking Royal Commission?
In Do we need a Royal Commission into the banks? (North
Coast Voices 21st April 2016) I wrote: “What is very obvious is that
there is a need to shine a very strong light on the banking/ finance industry
in order to force the changes that are required to make it fairer and more
responsive to customer needs. Moreover
there is an ongoing need to ensure proper compensation for consumers who have
been hurt by unscrupulous behaviour over recent years. And the “bad apples” in the sector need to be
identified and removed. This would lead
to a marked improvement in public confidence in the banking/finance system.”
What has changed in the
six months since then?
Very little of substance. The returned Coalition Government continues
to reject holding a Royal Commission into the banking/finance system while the
ALP Opposition and the Greens continue to call for one. However, the Government has obviously been
feeling under pressure on this matter. Although it still continues to rail
contemptuously about the Opposition’s “populist” Royal Commission policy, it
has abandoned its “do nothing” stance to take some limited action which it
obviously hopes will neutralise Labor’s calls.
The first of these was a
brief inquiry conducted by the ten member House of Representatives Standing
Committee on Economics on October 4th -6th. (The composition of this Committee is: five
Liberal MPs, one National, three Labor and one Green.) It was called by Prime
Minister Turnbull after the major banks failed to pass on in full the Reserve
Bank’s 0.25% rate cut to mortgage holders. Mr Turnbull said that it was an
opportunity for the banks to explain how they deal with their customers, and why
they make interest rate decisions and be open and accountable about it. It is
significant that it was interest rates, not the many other really appalling
actions of the banks over many years that produced this tepid inquiry.
The CEOs of the four
major banks (Commonwealth, ANZ, National and Westpac) each spent three hours
answering questions on matters such as bank policies, past mistakes, how these
had been remedied and the action taken on those responsible for mistakes and
illegal activities.
Some committee members
were concerned about the very limited time available (around 20 minutes with
each CEO for each member) which led to the question of whether CEOs would be willing
to return for a further session. Deputy Chair of the Committee Matt
Thistlethwaite (Labor) remarked that the twenty minutes he would be getting was
farcical because he had two days’ worth of questions to put to the CEOs. Apparently those asked about returning
expressed a willingness to do so – quite understandably given that this
“inquiry” was obviously very preferable to a Royal Commission.
All CEOs were contrite
about their banks’ past performances but claimed that the problems had been
investigated (or were still being reviewed) and were (or would be) fixed.
Obviously they believe that the Australian community should accept promises that
the banks will put their own houses in order – something they have obviously
not felt compelled to do in the past. The fact that many (if not most) of those
responsible for the bad behaviour are still employed by the banks raises
serious questions about bank culture and doubts about the banks’ commitment to
improvement. There are many other issues
which need more than vague promises about “doing better in future”. These include the lack of transparency, the
lack of competition in the sector, the incentives which have encouraged
predatory and illegal behaviour, and the inflated salaries rewarding the CEOs
who are ultimately responsible for the culture and the bad behaviour.
The inadequacy of this
brief and tepid inquiry was obvious even to the Government. Although still anxious to shield the banks
from a really sweeping and effective inquiry, it has recently announced a
further inquiry – a banking tribunal which it is claimed will be a low-cost way
for victims of the banks to seek justice.
The Opposition has
predictably seen it as yet another way to avoid a Royal Commission with Shadow
Financial Services Minister Katy Gallagher claiming it was “all pre-determined and
pre-agreed with the banks.”
What must be worrying
the Government is that there is considerable public support for a Royal
Commission and the paltry measures so far undertaken by the Government are
unlikely to weaken this support. A national poll conducted by the Australia
Institute in the second half of September found 68% supported a Royal
Commission or similar inquiry and only 16% opposed it. Furthermore 52% of those surveyed believed
that Prime Minister Turnbull was protecting the banks in refusing to call a
Royal Commission. Only 21% disagreed.
This issue is not going
to go away. The more the Government tries to defuse the situation with ad hoc
measures such as the recent ineffective Parliamentary Committee inquiry and the
promise of a banking tribunal, the more it is going to be seen as being out of
touch with a very substantial part of the electorate.
Hildegard
Northern
Rivers
GuestSpeak is a feature of North Coast Voices allowing Northern Rivers residents to make satirical or serious comment on issues that concern them. Posts of 250-300 words or less can be submitted to ncvguestspeak AT gmail.com.au for consideration. Longer posts will be considered on topical subjects.
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