A 2019 Australian Federal Election Policy Guide

SECTION SEVEN 

THE BANKING AND FINANCES SECTOR ROYAL COMMISSION 

https://i2.wp.com/haitchconvey.com.au/wp-content/uploads/2018/04/See-no-evil-hear-no-evil-speak-no-evil-monkeys-14750406-1600-1200.jpg?fit=1600%2C1200&ssl=1

ROYAL COMMISSION ‘GESTATION PERIOD’

 

April 2014 - November 2017

 

The financial sector Royal Commission began the “long gestation period”, as Mr Morrison would later describe it, in 2014 when a Senate Economics Reference Committee made the following recommendation among others exclusively in relation to the Commonwealth Bank only

 

2014 Senate Economic References Committee Report https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASIC/Final_Report/b03

 

Final Report Performance of the Australian Securities and Investments Commission. 26 June 2014

 

Recommendation 7 1

 

The committee recommends that the government establish an independent inquiry, possibly in the form of a judicial inquiry or Royal Commission, to: thoroughly examine the actions of the Commonwealth Bank of Australia (CBA) in relation to the misconduct of advisers and planners within the CBA's financial planning businesses and the allegations of a cover up; identify any conduct that may amount to a breach of any law or professional standard; review all files of clients affected or likely to be affected by the misconduct and assess the appropriateness of the compensation processes and amounts of compensation offered and provided by the CBA to these clients; and make recommendations about ASIC and any regulatory or legislative reforms that may be required.

 

 

Source:https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASIC/Final_Report/b03

 

With the Abbott Government ignoring this recommendation, Australian Greens Senator Wish-Wilson took the matter into the Senate chamber and began campaigning for a broad sweeping Royal Commission into the financial services sector.

 

In June 2015, Senator Wish-Wilson moved a motion in the Senate chamber--

 

Senator WHISH-WILSON (Tasmania) (16:07): I move: That the Senate— (a) notes: (i) the recommendations of the Economics References Committee inquiry into the performance of the Australian Securities and Investments Commission, and (ii) the allegations that financial planners at the Commonwealth Bank of Australia, National Australia Bank, ANZ Bank, Macquarie Bank and, most recently, IOOF had engaged in unethical and/or unlawful activity; and (b) calls on the Government to establish a royal commission into misconduct within the financial services sector.

 

I seek leave to make a short statement.

 

The PRESIDENT: Leave is granted for one minute.

 

Senator WHISH-WILSON: It is time for a broad-ranging royal commission in this country into white collar crime and misconduct in the financial services sector. Nearly 12 months ago, the Senate inquiry of the Economics Committee made a recommendation for a royal commission into the Commonwealth Bank. Following that, in the last 12 months, thanks to some brave whistleblowers and some dogged reporting from Fairfax journalists, we have seen allegations and revelations of misconduct at Macquarie Bank, ANZ, National Australia Bank and, recently, at IOOF. How many more scandals are lurking under the surface? Although the Senate has done some good work, and I do commend some of my colleagues in this chamber for their work, the committee made a recommendation for a good reason. That is, a royal commission would have the powers to get to the bottom of this and sort it out once and for all for the good of the financial services sector and for the good of the Australian people. I recommend my fellow senators support this motion.

 

Source: https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansards%2F4eed2018-4d3f-44d9-9722-b4eb019d1634%2F0136;query=Id%3A%22chamber%2Fhansards%2F4eed2018-4d3f-44d9-9722-b4eb019d1634%2F0136%22

 

Both the Australian Labor Party and the Coalition (with the exception of Senator John Williams) voted against the royal commission motion presented by Wish-Wilson.

 

Source: https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansards%2F4eed2018-4d3f-44d9-9722

b4eb019d1634%2F0138;query=Id%3A%22chamber%2Fhansards%2F4eed2018-4d3f-44d9-9722-b4eb019d1634%2F0136%22

 

Almost a year later, in April 2016, Senator Whish-Wilson again moved a second motion in the Senate, with very similar terms to the June 2015 motion.

 

Senator WHISH-WILSON (Tasmania) (19:42): I move: That the Senate— (a) notes:

 

(i) the recommendations of the 2014 Economics References Committee inquiry into the performance of the Australian Securities and Investments Commission,

 

(ii) the misconduct that has been uncovered in the financial planning arms of the Commonwealth Bank of Australia, National Australia Bank, ANZ Bank and Macquarie Bank,

 

(iii) that IOOF are being investigated for insider trading and front-running,

 

(iv) That the insurance arm of the Commonwealth Bank is alleged to have unfairly and fraudulently denied life insurance claims,

 

(v) that court proceedings have been initiated against ANZ Bank and Westpac for manipulation of the bank-bill swap rate, and (vi) the lending practices of ANZ Bank and Bendigo Bank that contributed to the collapse of forestry managed investment schemes;

 

(b) calls on the Government to establish a Royal Commission into misconduct in the banking financial services sector; and (c) notes That the Australian Greens moved a motion for the Senate to support a Royal Commission on 24 June 2015.

 

Source:

https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansards%2F548f7e7e-68e6-4e9c-8f40-5e4a56df0b06%2F0182%22

 

This time the motion was supported by the Australian Labor Party and some cross-benchers, but again voted against by the Coalition [For 34 -Against 27] with five pairings for absentees.

 

Source

https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansards%2F548f7e7e-68e6-4e9c-8f40-5e4a56df0b06%2F0184;query=Id%3A%22chamber%2Fhansards%2F548f7e7e-68e6-4e9c-8f40-5e4a56df0b06%2F0182%22

 

The Bill passed the Senate and was then debated and rejected by the Coalition in the House of Representatives.

 

On April 8th 2016, with an `election around the corner, Opposition leader and Shadow Treasurer Chris Bowen announced that an elected Labor Government would immediately launch a Royal Commission into the financial services sector with an emphasis on “the big banks”.

 

Chris Bowen said a royal commission would examine the banking and financial services sectors, including superannuation funds, and cost $53m.

 

The royal commission would conduct a two-year inquiry into the banking and financial services sectors, including superannuation funds, and cost $53m.

 

Mr Shorten said the sector had been rocked by a string of scandals that were “not isolated and one-off examples” but rather pointed to systemic problems in the industries.

 

“Australia has one of the strongest banking sectors in the world and we want to keep it strong. But public confidence in the banking and financial services industry has taken hit after hit over the previous few years. Many Australians have suffered through the decisions of banks and financial institutions. Retirees who have lost their retirement savings, small businesses who have lost their livelihood, Australian families who have lost hundreds of thousands of dollars, life insurance beneficiaries denied justice and legitimate claims. There are literally tens of thousands of victims if not more. And today I say enough is enough.”

 

Then Treasurer, Scott Morrison said responses to banking scandals needed to be proportional.

 

“The problems have been identified and are being dealt with by the Australian Securities and Investments Commission (ASIC), which he called “a tough cop on the beat. The government is not proposing a royal commission and has opposed one consistently,

 

The Australian Bankers’ Association’s chief executive, Steve Munchenberg, said:

 

“We don’t understand what this royal commission is meant to achieve. The royal commission sends a worrying signal and would decrease confidence in the banking system. Foreign investors would be asking what is wrong with Australian banking sector”.

 

Liberal MP Warren Entsch welcomed Turnbull’s recognition of problems in the sector but said

 

“an apology from the big banks and a commitment not to do it again in the future is not enough. I believe we need to go further – we need a full royal commission into the profit-driven and immoral activities of the big banks and they must pay an appropriate level of compensation to clients for past wrongs,”.

 

Source: Katharine Murphy. Labor Calls for Banking and Financial Services Royal Commission. The Guardian, 8 Apr 2016 https://www.theguardian.com/business/2016/apr/08/labor-calls-for-banking-and-financial-services-royal-commission

 

By late November 2017, momentum for a Royal Commission was mounting. Michael Roddan at The Australian reported that Nationals senator Barry O’Sullivan was circulating a draft private member’s bill to establish a wide-ranging inquiry into the banking sector, vowing to move it in the Senate.

 

Finance Minister Senator Mathias Cormann attempted to quell the momentum, saying that while an inquiry might be

 

“an attractive political exercise for some ... it wouldn’t ­actually lead to any public interest benefit. It would be another long, costly process that wouldn’t provide us with any new information. A more important thing to do right now, we believe, is to deal with the issues that we all know have emerged in recent times — to address them. The most important thing about banking and Australia and the role of banks in the competitiveness in Australia is having a strong system that attracts those deposits.”

 

Westpac chairman Lindsay Maxsted has warned that persistent calls for a royal commission could lead to higher funding costs for the banking system, which would ultimately be felt by borrowers in the form of higher interest rates.

 

Dr Henry, a former Treasury secretary, said the increasing chances of a royal commission had not yet turned global investors away in enough numbers to affect funding markets, but the calls were starting to make global investors worry about the system’s health. “We are getting increasing numbers of people saying: ‘What the hell is going on down there?’,” Dr Henry said.

 

He said the world believed Australia had one of the safest, most secure and stable banking systems in the world. But he said the bank bashing had investors questioning whether “there’s some problem there” and that calls for a royal commission were hints that there was more that investors did not “know about” the banks.

 

Other banks claimed a Royal Commission could see international investors turn their backs on the sector. Australian banks rely on international wholesale funding markets for about a third of their funding, with local depositors making up the balance. Last financial year the big four banks raised almost $150 billion in wholesale funds.

 

Source: Michael Roddan. Financial Services sector claims banking royal commission would drive up interest rates. 24 November 2017. https://www.theaustralian.com.au/business/financial-services/calls-for-banking-royal-commission-to-drive-up-interest-rates/news-story/1b8782f28664737e484e7449bdad7341

Source: https://peter-whish-wilson.greensmps.org.au/fix-the-banks

THE PRIME MINISTER CALLS FOR A ROYAL COMMISSION

 

 

[November 2017]

 

By November 2017, then Prime Minister Malcolm Turnbull had lost his majority in the House of Representatives. Barnaby Joyce (New England) and John Alexander (Bennelong) were missing because they were ruled ineligible by the High Court under dual citizenship laws in the Constitution and were waiting on by elections to be re-elected.

 

With the Coalition two seats down in the lower house - the Prime Minister was at risk of being humiliated on the floor of parliament if his own team members turned against him.

 

The issue of a banking inquiry has been causing divisions within the Coalition. QLD Nationals Senator, Barry O'Sullivan was pushing a bill calling for a Royal Commission. Queensland Liberal Party MP Warren Entsch was also now calling for the Royal Commission.

 

- A senate committee had recommended a royal commission in 2014;

 

- The Australian Greens lodged their first motion on the proposal in June 2015, supported only by NSW Nationals Senator John Williams. The Coalition and the Australian Labor Party voted against a Royal Commission in the senate; 

 

- The Australian Labor Party got on board and supported the Australian Greens second motion in the Senate in April 2016 along with back-bench senators;

 

On November 30 2017, then Prime Minister Turnbull  performed a major backflip over a banking inquiry - announcing a $75 million Royal Commission into misconduct into the financial services industry.

 

Mr Turnbull had repeatedly rejected calls for a banking Royal Commission since he took office before the 2016 election.

 

When asked if the Nationals had anything to do with his decision, he replied:

 

"We are all aware of the circumstances in the Parliament. We've got two by-elections underway, the numbers are down in the House of Representatives ... you all understand the political circumstances.”

 

In other words, had the two ejected MPs not created a circumstance where Turnbull lost control of the House of Representatives, the Prime Minister would not have given in to the threat of National MPs willing to humiliate him in the House of Representatives and the Royal Commission may never have happened.

 

Up until Warren Entsch change of mind in late November 2017, the Liberal Party had consistently opposed the Royal Commission proposal since it was elected to Government in 2013.

 

It was a change of political circumstances - not a change of mind- that drove the Prime Minister to do his back-flip and call for an inquiry.

 

Instead, Turnbull justified his back flip by arguing the bank's themselves had become concerned about the speculation of a Royal Commission and were appealing to him to hold one to get the banks into a state of stability and certainty. Mr Turnbull said the bank CEOs had raised

 

"serious concerns the ongoing uncertainty is undermining the financial system. It is clear that the speculation and the uncertainty and the politics around this issue require the government to take control of the inquiry issue, have a properly constituted inquiry, which is a Royal Commission, and get this matter addressed,".

 

Always standing in support of the banks, then Treasurer Scott Morrison sought to take control of the agenda and terms of references of the Royal Commission, limiting the time line, funding and scope of the “regrettable but necessary” inquiry into the finances sector.

 

"This will not be an open-ended commission, it will not put capitalism on trial…This should not be at commission that runs forever, costing many hundreds of millions of dollars. We are taking control as a government to protect the strength of our banking system through a properly constituted inquiry on these terms of reference”.

 

Source: Fiona Willan. PM calls Royal Commission into banking. Nine National News. 30 November 2017. https://www.9news.com.au/national/2017/11/30/09/17/banking-inquiry-called-by-prime-minister-and-treasurer.

THE ROYAL COMMISSION PROCESS AND DISCOVERIES

 

[ March 2018- February 2019 ]

 

The Royal Commission began hearings in March 2018. The Commission was taking on the biggest financial institutions in the country early in the investigation.

 

In June 2017, the Commonwealth Bank, which is the largest company in the country, posted a full-year cash profit of $9.8bn, up 4.6%. It was followed by Westpac (full-year profit $8.1bn, up 3%), ANZ ($6.4bn, up 12%), and NAB ($6.6bn, up 2.5%).

 

Australia’s seven largest authorised deposit-taking institutions (including the big four) held $4.6 trillion in assets – around two and a half times the size of Australia’s $1.8 trillion economy, as measured by nominal GDP.

 

Source: Amy Remeikis. Kelly O’Dwyer forced to admit banks royal commission was needed. ABC News Online. 22 April 2018.

 

The royal commission had been asked to investigate whether any of Australia’s financial services entities have engaged in misconduct, and if criminal or other legal proceedings should be referred to the commonwealth.It was also asked to consider if sufficient mechanisms are in place to compensate victims.

 

Within a month the Commission had already proven the value of the investigation, confirming concerns raised by the Australian Greens, renegade Nationals senators and MPs and eventually the Australian Labor Party about the corrupt, misleading self-interested, parlous state of financial institutions and the impact they were having on Australian customers.

 

Barnaby Joyce and Tony Abbott both were already publicly admitting they were wrong to oppose a royal Commission. In a tweet on April 18th , Barnaby Joyce tweeted -

 

“ In the past I have argued against a Royal Commission into banking. I was wrong. What I have heard is so far is beyond disturbing”.

 

Source: Katharine Murphy. The government owes voters an apology. Opposing this banking commission was wrong. The Guardian. 19 Apr 2018.

 

In just four weeks, the Commission had uncovered evidence of appalling behaviour by Australia’s major banks and financial planners from the previous decade. The evidence included

 

(a) alleged bribery;

 

(b) forged documents;

 

(c) repeated failure to verify customers’ living expenses before lending them money;

 

(d) Selling insurance to people who can’t afford it;

 

(e) Lying to regulators;

 

(f) financial planners charging fees to clients who were deceased.

 

(g) financial advisers had failed to comply with the best interests of customers in 75% of advice files reviewed and 

 

(h) an “inherent” conflict of interest arising from banks providing personal financial advice to retail clients while also selling them financial products.

 

After AMP executive Anthony Regan admitted that AMP had lied repeatedly to the corporate regulator, Scott Morrison warned “wrongdoers could face jail. That’s how serious these things are,”.

 

Political Journalist Katharine Murphy concluded after the first few weeks of hearings that

 

"The Turnbull government, if it has any sense of right and wrong, and any remaining shred of political judgment, should say to voters, without dissembling or weasel words: “Sorry, we got this one badly wrong.”

 

Source: Katharine Murphy. The government owes voters an apology. Opposing this banking commission was wrong. The Guardian. 19 Apr 2018.

 

In April 2018, while still prime minister, Malcolm Turnbull acknowledged that “the government would have had less political grief if it had set up a royal commission two years ago” but defended his decision to “take action immediately” instead.

 

Source: Claire Bickers. Banking royal commission: Treasurer fails to apologise following “scathing” final report. News Corp Australia Network. 5 February 2019.

 

Contradicting her Prime Minister, Assistant Finance Minister, Kelly O’Dwyer was forced to admit consumers would benefit from the banking royal commission, while repeatedly refusing to concede the government was wrong to delay it.

 

"If you want to go over the political entrails, Barrie, let me say this…the big scandals that happened, Great Southern, Storm Financial, happened when Bill Shorten was the financial services minister and had direct responsibility. He was almost three years into the job. Labor did virtually nothing. We acted on coming into government. We put in place a financial system inquiry. We have been instituting the vast bulk of all of those recommendations. You know it is a bit rich for people to claim that we should have acted earlier, when, in fact, they had the opportunity, and when we, as a government, have been very sober in the way we’ve gone about it. And we are actually getting results for consumers. We care about consumers.”

 

Source: Amy Remeikis. Kelly O’Dwyer forced to admit banks royal commission was needed. ABC News Online. 22 April 2018.

 

Scott Morrison, who had constantly argued against a royal commission into the banks until his Prime Minister had his arm twisted by rebellious National MPs , claimed the Royal Commission had already damaged the Australian banking industry’s reputation internationally.

 

Also in contradiction to the then Prime Minister’s concession, Scott Morrison refused to concede the government had got it wrong by resisting pressure to establish a royal commission, dismissing calls for an apology as “political point-scoring” by Labor.

 

The treasurer said the Turnbull government had been rolling out reforms to financial services for some time in response to widespread reporting about scandals within institutions, since launching the financial systems inquiry after the Coalition was elected in 2013.

 

Asked again whether it was time to apologise for making the wrong call on the royal commission, Morrison said

 

“Bill Shorten might be interested in political point scoring about this issue. What we’ve been doing is being focused on getting the job done. This is a serious issue relating to our banking and financial and superannuation system and the public wants us to focus on getting stuff done. I don’t want to engage in political point scoring with Bill Shorten.

 

Source: Katharine Murphy. Scott Morrison won't apologise for resisting banking inquiry. The Guardian. 20 April 2018. https://www.theguardian.com/australia-news/2018/apr/20/scott-morrison-wont-apologise-for-resisting-banking-inquiry.

 

Former Prime Minister Malcolm Turnbull voted against a royal commission 26 times when he was the nation’s leader before finally conceding.  This history was cast aside by February 2019 when he was a long way away from having to concern himself with the balance of power in the House of Representatives and two absent Coalition MPs.

 

On the day the final report into Australia’s banking royal commission was released, former prime minister Malcolm Turnbull  threw his former colleagues under the bus. He told Sky News reporters some examples of wrongdoing exposed in the royal commission had “shocked” him, adding he hadn’t believed the “cultural failures” in the banking sector were

 

“as bad as that. I believe, with the benefit of hindsight, we should have held the royal commission earlier. I think what the royal commission has done is provided something of a shock treatment to really ram home the need for cultural change. You’ve got to restore faith and confidence,”

 

It comes as Treasurer Josh Frydenberg and Prime Minister Scott Morrison refused to apologise for the government delaying the inquiry. “I’m focused on the future,” was the Treasurer’s response this morning after Commissioner Kenneth Hayne’s “scathing” final report yesterday called for a massive shake-up of the banking and financial services sector with 76 recommendations.

 

“What matters to your viewers ... and the people of Australia, is that trust is restored in our financial institutions, that they’re held to account for misconduct and that the culture changes,”.

 

Asked later on Sky News “Are you sorry?”, he said:

 

“I absolutely understand the deep hurt that’s being felt by people right across the economy and the community and what we have said is that in taking action on all 76 recommendations, we will get a better deal for Australian consumers. We are on the consumers’ side and the banks must do better.”

 

As Treasurer, Mr Morrison had called the push for a royal commission a “populist whinge”. Now ,as Prime Minister, Scott Morrison again refused to apologise

 

“I initiated the royal commission. I’ve responded to the royal commission as Prime Minister, with the Treasurer and our entire team, and we are taking action on all 76 recommendations.

 

Asked why he had failed to call the inquiry earlier, Mr Morrison said:

 

“Well, as Treasurer ... you are going to be careful about what the potential impacts are on a financial system on which everybody’s livelihoods depend. Your mortgage, your loan, everything goes through the financial system - and I was being very careful. You could accuse me of being overly cautious.”Mr Morrison said he was particularly concerned about a possible credit crunch. But we’ve called it, we’ve done it. It was done, I think, in a very timely and thorough way, and I want to thank particularly Justice Hayne and all of his team for the very thorough job that they did.”

 

Source: Claire Bickers. Banking royal commission: Treasurer fails to apologise following “scathing” final report. News Corp Australia Network. 5 February 2019.

BANKING ROYAL COMMISSION RECOMMENDATIONS

 

 

The customer can no longer come second to profit — this is the theme guiding Commissioner Kenneth Hayne’s landmark report into misconduct in banking, superannuation and other financial services.

 

Below are his key recommendations and findings.

 

Treasurer Josh Frydenberg said the Government will back nearly all the ideas put forward by Commissioner Hayne. Unless specified, the recommendations in this list do have its thumbs up.

 

The Opposition, which pushed hard for the inquiry in the first place, is backing all recommendations.

 

Banking 

 

In arguably the biggest shift, Mr Hayne said the home-loan borrower should pay the mortgage broker for finding a loan. At the moment the lender pays the broker via commissions. The Government isn’t endorsing this switch in its entirety, but Labor likely will. Commissioner Hayne said the first step would be to get rid of trail commissions over two or three years, which the Government does support.

 

* Mortgage brokers must be made to act in the best interests of the borrower.

 

* Car dealers offering finance should be covered by consumer credit protections.

 

* Banks must do a better job of providing access to services for people in remote areas and those who struggle with English.

 

* Ban dishonour fees on basic accounts.

 

* During a drought or other natural disaster, default interest is not to be charged on loans secured by farm land.

 

* Banks need to ensure distressed agricultural loans are managed by experienced agricultural bankers, with “enforcement” to be treated as the worst outcome Financial advice

 

* Each year provide in writing the services to be received and total fees to be charged.

 

* Any ongoing conflicted remuneration — pay which influences advice — currently permitted should be axed as soon as possible. The government supports this.

 

* Consider reducing the cap on life insurance commissions, with the goal of “ultimately” getting to zero.

 

* Look at having a blanket ban on conflicted remuneration for general insurance and consumer credit insurance products.

 

* When a business offering financial planning is confident an adviser has engaged in misconduct, clients should be told and compensated promptly.

 

* Set up a new disciplinary system for financial advisers.

 

 

Superannuation

 

* Change the “machinery” of the superannuation industry so people only have one default account.

 

* Ban advice fees on MySuper accounts.

 

* The unsolicited sale — “hawking” — of superannuation should be stopped. Regulation

 

* The recently established Banking Executive Accountability Regime (BEAR), which is a system of checks and penalties for lenders’ leaders, should be extended to big super funds. Insurance

 

* Hawking of insurance should be banned.

 

* Funeral insurance should be subject to consumer protection laws.

 

* Cap the commission car dealers can earn on add-on insurances.

 

* Claims handling should be considered a financial service under the law, which means it would need to be provided “efficiently, honestly and fairly”. In giving this the tick, Mr Frydenberg said “inappropriate claims handling practices can cause significant consumer detriment”.

 

* The BEAR should also cover insurers.

 

 

Pay

 

* The regulator of banks and insurers, APRA, should not only watch for financial risk but also misconduct and compliance risks.

 

* Those regulated by APRA must build pay systems that “encourage sound management of non-financial risks … and reduced the risk of misconduct”.

 

* Force APRA-regulated companies to make rules that allow for claw back of pay in “appropriate circumstances”.

 

* APRA should focus on building cultures “that will mitigate the risk of misconduct”.

 

* Frontline staff should be paid not only for what they do but “how” they do it.

 

 

Regulators

 

* Retain APRA and the corporate regulator, ASIC, but there needs to be a new authority — independent of government — to oversee the “twin peaks”.

 

* ASIC’s starting point on enforcement should be “whether a court should determine the consequences” rather than infringement notices, especially if the alleged bad behaviour was by a large company.

 

* By law, APRA and ASIC should do more to co-operate and share information. External dispute resolution

 

* Set up a compensation scheme of last resort.

 

 

Law Breaches

 

* Widespread breaches referred to regulators, which could lead to civil and criminal charges.

 

* CBA may have broke the law in the way it gave advice on its Essential Super product.

 

* CBA’s CFSIL unit may have committed breaches by being slow to move people to MySuper accounts. NAB, and one of its superannuation licensees NULIS, have been referred to the regulator for a possible similar breach. Ditto Suncorp.

 

* OnePath, Oasis and IOOF Investment Management Limited (IIML) have been referred to APRA over accusations of fees for no service.

 

* AMP may have breached superannuation laws through “manifest” passivity.

 

* IIML “may not have given priority to members’ best interests” .

 

* Super trustee Suncorp Portfolio Services and Suncorp Life may have broken super laws by failing to act with due care, skill and diligence.

 

* Website misrepresentations acknowledged by Allianz have been referred to ASIC while the “inadequacy of its compliance systems” have been referred to APRA.

 

* TAL Life is accused of acting inappropriately through “bullying”, “surveillance” and the “misuse of the daily activity diary”, Commissioner Hayne said.

 

* Youi has been referred to ASIC for allegedly not acting in good faith over claims following natural catastrophes.

 

For the full report go to the Royal Banking Commission website

 

 

Source: John Rolfe. The Banking Royal Commission: What you need to know John Rolfe, News Corp Australia Network February 4, 2019.

 

2019 ELECTION IMPLICATIONS

 

The financial sector royal commission, the shocking findings and hardening recommendations have and will impact on the lives of most Australians.

 

It could galvanize a public against a Coalition Government who resisted the royal commission from 2014  till late in November 2017 - after the 2016 election- and over-ride any other issue in the minds of a wide range of voters. 

 

Everyone has a bank account, most have or will go to financial institution for small business finance, a home loan, a car or a credit card; everyone in paid work must have a superrannuation account and everyone uses ATM cards.  

 

The election implications could be profound if the Government is perceived as totally unapologetic for oppossing the inquiry,  picking and choosing which recommendations to adopt, deliberately deferring some recommendations whilst fast tracking others or failing to have a genuine impact on the culture and practics of the finance sector in Australia ahead of the election. 

 

Responding to the delivery of the final report of the Royal Commission, Opposition leader Bill Shorten was already hinting his party will go hard on this issue in the election campaign messages the party is preparing to launch the moment the election is called.

 

It could be the the only effective way of countering the negative press and scare campaign the Coalition is expected to mount on cash refunds to baby boomers, capital gains tax and negative gearing.

 

Mr Shorten said royal commissioner Kenneth Hayne’s final report highlighted a lack of public trust in the financial sector.

 

“This royal commission shows the failure of trust between the banking sector and Australians. The banks themselves should be ashamed of themselves for their behaviour and the government should be almost as ashamed by its behaviour trying to cover up the scandalous behaviour of the banks” .

 

Labor has vowed to implement all 76 recommendations handed down by royal commissioner Kenneth Hayne. Labor wants the government to schedule more parliamentary sitting days to implement the most basic recommendations of the banking royal commission, saying it would start rebuilding confidence in the financial system.

 

Mr Shorten said Mr Morrison should apologise for voting against a royal commission 26 times in parliament-

 

“But that won’t be enough. If you are fair dinkum about being sorry then what we do is we schedule another two weeks of parliament in March and we make sure we start implementing the recommendations of the royal commission. If this government can’t reconvene parliament for March, if they can’t say sorry, if they can’t start calling for senior directors to consider their position, they haven’t learnt their lesson.”

 

Opposition treasury spokesman Chris Bowen, embracing “in principle” all of Kenneth Hayne’s recommendations, said some could be introduced almost immediately. He said others, such as overhauling commissions in the mortgage-broking industry, could take years.

 

Mr Bowen criticised Mr Frydenberg for delaying taking action on the recommendation for customers to pay mortgage broker fees rather than banks.

 

“I don’t think you can cherry pick recommendations, either you support the royal commission recommendation’s or you don’t. The royal commission has not brought down the recommendations for fun,”

 

Mr Bowen urged the Coalition to schedule “as many (sitting days) as it takes” to pass the most basic reforms suggested by the royal commission through parliament.

 

“We don’t think the Australian people should have to wait until August to see some of these recommendations implemented. Some of them could be done quickly with legislation passed, and I think that would give the Australian people comfort that the parliament is doing its job and the report is being taken seriously. There will be a range of views expressed and unlike the government which is cherry picking which parts they like and which parts they don’t like, we accept the recommendations in principle and will move in close consultation with all affected parties.”

 

Bowen said the recommendations were the minimum action required and flagged Labor could come down with tougher reforms if it wins government.

 

“We think the action recommended is the minimum required and if we feel that we need to say more about what is necessary in the financial services sector we will say so well before the election.”

 

Josh Frydenberg has repeatedly shown no sign of regret, apology or admission of any wrong doing at all. This will not play out well with the electorate.  Once again, he attempted to take credit for the royal commission being pursued. He may be attempting to convince himself of this deception, but most of the electorate will not buy it. 

 

“We are the ones who called the banking royal commission. We are the ones who announced yesterday that that we are taking action on all 76 recommendations. We are the ones who put in place important reforms and we are the ones who are going to offer banking consumers a compensation scheme of a last resort.”

 

Calling it a “day of shame’’ for the banks, Opposition Leader Bill Shorten said the response to the royal commission would be a “big issue” at the upcoming federal election.

 

“I ask the Australian people at the election: Who do you trust to keep the banks honest: the Liberals who wanted to cover it up or Labor who wanted to see the truth?”

 

We can expect that last zinger from Mr Shorten in simplified form to be plasted across simplified message boards, election posters, electronic media advertising and other outlets. "Who do you trust...".  Reminds us of who ?  John Howard on border protection. 

 

Source: Greg Brown: Labor seeks to make banking royal commission an election issue. The Australian. 5 February 2019.

UPDATE FEBRUARY 7 2019

 

GOVERNMENT REJECTS CALLS FOR EXTRA SITTING DAYS 

 

Matthew Doran reported cross bench MPs Ms McGowan, Ms Sharkie, Dr Phelps, Mr Bandt and Mr Bartlett were joining the calls for more sitting days in the wake of the Royal Commission report. Mr Katter would consult his "colleagues" on the matter. 

 

The 2019 sitting calendar was already a contentious issue since it was released last year, with the Federal Opposition slamming the Government for pencilling in less than two weeks before the early budget on April 2.

 

Given the election must be held by May 18, Prime Minister Scott Morrison would have to kickstart the election campaign shortly after, leading to accusations the Government is seeking to avoid scrutiny and any test of its authority on the floor of parliament.

 

The Coalition remains unmoved, despite its lack of a majority on the floor of the House of Representatives. Leader of the House Christopher Pine told the ABC  

 

"The Government will not be changing the sitting calendar,"

 

The debate over more sitting days to deal with the banking royal commission's findings came as Labor also demands an investigation into whether its final report was leaked early.

 

The Federal Government released Commissioner Hayne's report at around 4:20pm on Monday, after the share market had closed. But Shadow Financial Services Minister Clare O'Neil has written to the head of the Prime Minister's Department to investigate whether it remained under lock and key until then.

 

 "At approximately 11:00am on Monday traders plunged half a billion dollars into bank shares; an investment which turned a $22 million profit within just 24 hours, thanks to the unexpected increase in the value of bank shares when the market reopened on Tuesday morning. Given that the lock-up commended at 1:00pm — two hours after this activity on the ASX — and the Hayne report was in strictly limited circulation for a number of days within the Government prior to its official publication, I ask that you investigate whether information was leaked by a Ministerial Office, a Minister or a member of the Australian Public Service prior to its publication."

 

Source : Matthew Doran. Crossbenchers back more sitting days to deal with banking inquiry. ABC News Online 7 February 2019.