The Final Report of the Royal Commission into the banking sector has officially been released, following an icy media op between Treasurer Josh Frydenberg and Commissioner Kenneth Hayne. Frydenberg tried to lighten the mood as photographers tried to urge them to shake hands, but Hayne refused to even look at the Treasurer – the utter contempt was palpable. Given the findings, and how most of the government voted north of 20 times to try and hold back from the RC, that comes as no surprise. (Link to the report below).
“Because it is the entities, their boards and senior executives who bear primary responsibility for what has happened, close attention must be given to their culture, their governance and their remuneration practices.”
Hayne specifically points out that the misconduct carried out by the various companies under scrutiny is an inbuilt aspect of the sector’s culture. The profits of the financial institutions almost always came before the needs of the customers, and a number of times customers were ripped off and charged for services they did not receive. Regarding the latter, CEO of NAB, Andrew Thorburn, said this was “… in large part a product of poor IT infrastructure… [and] legacy systems issues.” I concur with Hayne’s statement on that: “I cannot and do not accept this.” NAB tried to sweep it aside as “accidental”, that that money was never intended to end up in NAB hands; it just did. The fact that it happened regularly over an extended period of time either details the need of a major overhaul of NAB’s systems and the resignation or termination of those too inept to pick it up, or (most definitely) Thorburn was lying and this should be regarded as theft.
Another aspect honed in on by the RC was hawking, pushing products onto people, sometimes to the point of harassment, that either the client was not interested in or, under their circumstances, were not in a viable position to accept. The most common cases of this were in relations to insurance and loans and mortgages. In much the same way that American banks formed the Global Financial Crisis by creating a housing bubble atop dodgy loans, made to people who could in no way afford them, similar behaviour has been picked up here. Along with developers and investors grabbing properties, a similar hike in housing prices and a potentially dangerous bubble has become a reality here in Australia (although our economy will not have as great an effect on the global economy as America did).
The telling part of the report is that it identifies that much of the misconduct carried out by the financial sector is already prohibited and against the law. The ACTU has already made it known they are unhappy with the results of the RC, decrying the small number of recommendations (76), the lack of referral for criminal prosecution (although there is the potential, if things are carried out properly, that this will still happen anyway), and nothing to suggest the removal of banks from being involved with Superannuation (but there are recommendations regarding the regulations and laws surrounding it).
At this point in time, the public consensus appears to be pessimistic. While the RC has been hailed a success by most, very few have faith in the government to hold their promise to adhering to all 76 recommendations, and it would be overly optimistic to think any management or executives in the financial sector – especially from the Big 4 banks – will face anything other than fines and a stern ‘talking to’. Jail time is almost certainly in order, but no one is holding their breath to watch it actually happen.
The Coalition consistently voted against a Royal Commission, with Scott Morrison passing it down 26 times, and most others doing so over 20 times each as well. To expect that these self-serving leeches will enact any worthwhile legislation when hundreds of thousands of dollars in donations were poured into the Coalition (and Labor) parties between 2017 and 2018 alone is probably too hopeful. As we head towards the election in May, it is quite convenient that the donation data for the current time period will not be released until this time next year. A pity that it will take that long to see who is trying to buy our elections – but the usual assumptions can be made and will undoubtedly be accurate.
The RC was started at the end of 2017, and at its conclusion it simply and grandly exposed the corruption taking place in our financial institutions. If nothing else, it should be a key indicator for everyone in two ways. Firstly, as voters, that the major parties, and a number of smaller ones like the Australian Conservatives and Pauline Hanson’s One Nation, have all accept donations from banks and other equally damaging industries, like fossil fuel companies. A careful eye also needs to be maintained on Independents, because despite their name many of the current batch are simply Liberals with more enticing public images, like Julia Banks who defected from the LNP in defiance of sexist behaviour. Applauded for taking a stand, it seems to have distracted many from her own voting record in regards to the RC.
Secondly, as customers of these banking conglomerates, it should be realised that our interests are important only insofar as they contribute to the bottom line – profit. Many banks, but specifically ANZ, CBA, NAB, and Westpac, have failed many customers in a number of ways and to varying degrees. To put it bluntly, you as people deserve better, and they do not deserve your consideration when it comes to your financial needs. I will add my own recommendation here: if you are associated with any of these banks, it would be to your benefit to terminate your ties with them and to find a more ethical company to deal with.
This whole situation only serves to consolidate my conviction that changing banks was indeed the right thing to do.
Link to the full report HERE.
List of donations made to political parties in the 2017-2018 period HERE.
My previous post: Why I Changed Banks (this was also shared on Twitter at some point too, thank you whoever did that for sharing).