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The problem with Australia’s banks is one of too much law and too little enforcement

Deborah Ralston writes in The Conversation (29.9.18) about the interim report presented by the Royal Commission into Australia’s banking and financial services industry, observing that Commissioner Kenneth Hayne is arguing for less and clearer law, and tougher “corporate cops”.

‘Prime Minister Scott Morrison and Treasurer Josh Frydenberg moved very quickly to deliver the interim report of the Royal Commission into Financial Services to the public. It was submitted to the Governor General, tabled in parliament (out of session), and made public on the same afternoon – Friday September 28.

‘The three-volume report is limited to findings from the first four rounds of hearings, on consumer credit, financial services, lending to small- and medium-sized enterprises, and experiences with regional and remote communities.

‘So far the commission has received almost 10,000 submissions, mainly related to banking (67%), superannuation (12%), and financial advice (9%). Most address issues relating to personal finance, superannuation, or small business finance.

‘In receiving the interim report, Frydenberg reiterated its key message that financial institutions have put “profits before people”.

‘… According to the report, poor culture and conduct in banks have been driven by their remuneration policies, with almost every instance of misconduct being directly linked to monetary benefit.’

Hayne holds fire, but the banks’ day of reckoning is coming

Andrew Linden and Warren Staples write in The Conversation (1.10.18) that, in his three-volume 1,000 page interim report, Commissioner Kenneth Hayne has built an irrefutable case for root and branch reform of the banking sector.

‘The evidence presented in the first four rounds of the Royal Commission into Banking and Financial Services was harrowing.

‘It would be a mistake to think the appalling misbehaviour uncovered so easily by the Commission was unconnected, just a few bad apples, as the banks and their supporters had been claiming.

It’s a mistake Commissioner Hayne doesn’t make in his interim report, describing the misconduct as systemic, orchestrated as a matter of corporate policy, and against the law.

‘So shocked is he about what he concludes is law-breaking sanctioned at the highest levels that he asks rhetorically whether there would be any point in new laws, given the old ones were often ignored by banks and are not enforced by regulators.

‘He makes no recommendations in his three-volume 1000 page interim report, instead drawing together a long list of questions he intends to answer in his final report, due in February.

‘Before then, the bank chief executives appearing in the Comission’s final round of hearings will be asked some very tough questions.’

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