- Australian banks: Time is right for a royal commission
- By Editorial
- Contributed by: Syme ( 1 article in 2017 )
A royal commission into the banks is in the public interest.
There is a wealth of wisdom in the notion the first thing to do when seeking to exit a hellish hole is stop digging.
However, the custodians of much of the nation's wealth seem intent on unwisely digging themselves ever deeper into a pit of public and parliamentary opprobrium, to the ironic extent that they risk helping bring on the very royal commission they've been seeking to avoid.
The banks would have us all believe that evidence, much of which has emerged as a result of investigations by The Age, of wrongdoing in their companies is the result of a few "bad apples". That is rubbish.
As we argued last year as the evidence against the banks mounted, it is in the national interest to institute a royal commission into the probity of the culture and conduct of such economically and socially pivotal financial institutions.
Testimony to parliamentary inquiries in recent days has buttressed our view. In coming days, the chief executives of CBA, Westpac and ANZ will follow that of NAB, whose testimony on Friday revealed widespread poor behaviour, including the overcharging of hundreds of thousands of customers and the inappropriate payment of large and arguably utterly undue bonuses.
Such appearances are part of the efforts by the banks and the coalition government to avoid a royal commission.
Their main argument is existing laws and regulators are sufficient to ensure the banks treat customers properly, and thus that a royal commission would merely be a costly impediment to the orderly functioning of the financial sector. This, too, is rubbish. A judicial probe would not impede existing regulators.
We have consistently argued existing regulatory bodies, particularly corporate watchdog the Australian Securities and Investments Commission (ASIC), have failed to adequately investigate and police the financial services sector. We note they are seeking to improve, and are currently pursuing Westpac over due diligence of lending.
We are witnessing only the second of the regular parliamentary grillings to which the bank CEOs have agreed to submit in their collective bid to avoid a judicial probe. But, even at this fledgling stage of this new process they must be wondering if it would not have been better to back a royal commission.
After all, the banks ceaselessly proclaim their probity, and so should welcome such a chance to demonstrate their bona fides. It's an important time.
Community confidence in the big banks, a protected oligopoly, has waned in light of evidence of conflicts of interest, shabby treatment of insurance customers and whistleblowers, market manipulation and of involvement in offshore tax havens.
On Tuesday, CBA's chief executive will be testifying in Canberra, amid an ongoing scandal involving the mistreatment of customers of his bank's insurance arm, CommInsure.
CBA sought to cauterise the situation by commissioning an investigation by a financial services outfit, Deloitte, but only arguably further increased damage to CBA's reputation when it emerged Deloitte did not speak to a single customer before concluding the bank was unimpeachable.
More than two years ago, a Senate inquiry recommended a royal commission into CBA to investigate forgery, fraud and allegations of a cover-up in its financial planning operation. Since then, the entire sector has come under increased scrutiny – and the case for a royal commission has become compelling.
It is believed the banks have long concluded the royal commission will happen. It is in everybody's interest, including the banks, to get on with it and reassure the nation its financial sector is not only handsomely profitable, but fair.