Long-suffering Australians who have had their savings and investments battered by the unscrupulous practices of banks will be kidding themselves if they believe justice will prevail following this Federal Government’s royal commission into the financial services sector.
Royal commissions are meant to help right the wrongs perpetrated on victims. But in announcing this probe, Prime Minister Malcolm Turnbull said there was nothing actually wrong with the financial services sector. Pardon?
Apart from pre-empting any findings of the yet-to-be-named head of the commission –, in itself a bad look Mr Turnbull’s rationale for calling the probe is questionable and more than likely, politically driven.
The Prime Minister said: “This will not be an open-ended commission, it will not put capitalism on trial, as some people in the Parliament prefer, and we’ll give it a reporting date of 12 months.”
Thanks for clarifying that, Sir. For a wee moment we had hoped that this would be a trial of all the documented excesses of a capitalist system that has stomped on the little person to suck out profit in the 10s of billions of dollars, year in, year out. Further, some of this was done using unethical practices that our courts, watchdogs and other authorities have called out, so why not put capitalism in the dock?
Treasurer Scott Morrison explained away why we needed this type of commission. “Politics is doing damage to our banking and financial system, and 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, rather than the alternatives present in other commission of inquiry proposals, subject to the vagaries of politics that would do harm and already has to date.”
Really? More than $30 billion in net profit was collected by the four major banks last financial year – net profit being the sum they made after paying taxes, wages and obscene bonuses to bank executives. If earning $30 billion-plus for shareholders is considered damage, well it beggars belief what they would be making in a “friendly and safe” year.
Mr Turnbull assured a press conference that the “terms of reference will ensure a responsible but comprehensive investigation into how financial institutions have dealt with cases of misconduct in the past, and whether those examples expose issues in terms of the cultural and governance issues, in terms of the regulation and supervision of the industry”.
Sorry to differ, but this probe is not likely in the least to be comprehensive. It will be a rushed job. The commission will be given just 12 months to look into the affairs of all banks, big and small, other financial institutions, insurance companies, wealth managers and superannuation funds. That is an investigation of thousands of companies. Is it really feasible for a commission funded to the tune of just $75 million to be able to thoroughly scrutinise the practices of, at a minimum, say 10 institutions every single day for a year? And further, even if this gargantuan task was achieved, the outcome would be sketchy and threadbare at best.
Now back to the scope of the proposed inquiry. The four banks who unusually wrote to the Federal Government requesting a royal commission asked that the net be thrown over all of its financial services cousins, too – insurers, super, wealth managers and so on. This smacks of an attempt to throw a bunch of red herrings into the mix to cloud what should be at the core of this investigation – badly behaving banks. The other sectors may have their indiscretions, too, but let’s leave them for another day. The major banks’ attempt to obfuscate the issue this way is nasty and self-serving and by agreeing to it, the Government is unashamedly siding with the Big Four merchants instead of every day consumers and small investors.
In fact, Mr Turnbull could not have made it plainer: “We have much to be proud of about our banking system and the experience of the global financial crisis should remind us of that. We have much to be proud of, but also much to take care of.”
He went on: “… all Australians, consumers, small businesses, farmers, shareholders, must have confidence and trust in the financial system. Now this royal commission’s establishment will end the uncertainty and speculation.”
The Prime Minister seems so sure of how this will end, it is pretty obvious the whole thing is being staged. Pity.
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Turnbull backflips on banking probe
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The letter that started it all
Industry leaders have their say
The political perspective
Watch the PM’s spin on RC backflip
Have your say on the royal commission
Pollies, pundits and the media respond
