- Time stops for no one at the banking royal commission
- By Sarah Danckert
- Contributed by: James_R ( 1 article in 2018 )
After two weeks locked in a small room in the Commonwealth Courts Building in Melbourne, one thing about the banking royal commission is clear: It's not going to investigate everything that has caught its attention. It will investigate what it can within the time frame given.
The best illustration of this came on Friday when investment banking giant Citi received a reprieve. It would not be cross-examined - as had been planned - over its statements regarding its alleged misconduct in selling credit cards.
Citi is one of the largest providers of plastic money in the country and given the group’s previous run-in with the corporate cops it’s quite the get-out-of-jail free card. Citibank’s evidence will now go unchallenged. Its executive will be spared the perp walk outside the court.
And so it was for the findings that were read out to the commisison by counsel assisting Rowena Orr, QC. As the clock hit 4.10pm, proceedings were wrapped up with only half the findings declared. The rest were contained in a document that had not been made public by Fairfax Media's deadlines.
Already there is chatter the commission will push out the next series of hearings in April to three weeks given the short shrift Australia’s mortgage market was given over this opening fortnight.
This would be helpful given the collective months and years of misconduct uncovered by Fairfax Media alone within the sector - from CBA, to NAB, to Macquarie. We also know of issues within ANZ’s financial planning arm and those of Westpac, AMP and wealth manager IOOF.
By comparison, the examination of the mortgage lending sector, a $1.5 trillion mega industry, has been boiled down to a three-day exercise of examination focusing only on NAB and CBA’s Aussie Home Loans.
The glimpse under the hood of those banks’ mortgage lending process raised fraud, bribery and mis-selling of mortgages.
All interesting, important and systemic stuff, but the commission must roll on and so it does. The fast-train approach means that Commonwealth Bank and Westpac were able to file relevant documents on Friday that would not be subject to examination or a public airing. In the case of the CBA it involved a confession of 469 instances of poor conduct.
Alongside the time contraints, another unhelpful - but not surprising - limitation of the inquiry has emerged.
So far the royal commission has mainly heard of examples of misconduct committed against a bank.
From dodgy mortgage brokers to car dealers, an army of third party representatives were cutting and pasting together payslips and bank statements to get loans for people who could not afford them.
In this process, so far, the regulator is held up as a saint while the banks are painted as either dismissive or responsive to the watchdog's concerns. What’s left out are all of the times when customer complaints have not been investigated by the Australian Securities and Investments Commission (ASIC), where the idea of “caveat emptor” runs more strongly than the royal commission could ever know.
The Commonwealth Bank offered to boost a customer’s credit card limit by thousands of dollars - adding to his existing debt of more than $27,000 - just days after he told the bank he had a problem gambling habit.
Indeed, apart from the testimony of problem gambler David Harris, who begged the CBA to stop giving him credit limits to no avail, we have not heard from a single customer complaint that was the result of poor conduct by a bank as opposed to by third parties.
What for the people who have had their signatures forged? What for the incentives not just those paid to the front line staff but the executives in the box? How sir, are you paid? Did you get a bonus from all of these dodgy mortgages. But alas, we stop at the superficial.
But it must be said the banks are not getting off scott-free in this exercise.
Throughout proceedings Commissioner Hayne and his counsel assisting, Rowena Orr, QC, Albert Dinelli and Eloise Dias have emphasised that despite the wrongdoing of third parties the banks had responsible lending requirements.
And that’s already an area that's prime for reform. But even then, the likely recommendation by the royal commission will be that third parties can’t be used or will be subject to similar regulations regarding responsible lending as the banks.
That will hurt the banks financially, but it won’t get to the heart of any misconduct inside the bank.