‘s big banks are expecting to face a royal commission some time in this or the next term of government, if momentum is maintained.
The banks reached this conclusion some months ago, and the argument for an official probe into such an economically and socially crucial sector has only grown since then, with the latest revelations of egregious malpractice by the Commonwealth Bank sparking an unprecedented public inquiry by one of the industry’s regulators, the n Prudential Regulation Authority, into its culture, governance and accountability.
This and other fallout, including the announcement of the chief executive’s departure, from the CBA’s alleged failure on more than 50,000 occasions to report deposits that might have involved money laundering by organised criminals and terrorists, has caused investors to cut the company’s shares significantly in recent days, toppling CBA from the perch of ‘s biggest company.
This lack of investor confidence is mirrored by declining trust in the banks in the broader community. That will not be restored by APRA’s investigation into CBA, although that is welcome. APRA and corporate watchdog the n Securities and Investments Commission have been reasonably criticised for an insufficiently robust response to the scandals.
Although royal commissions are costly and lengthy, the well-documented weight of evidence against the banks has become compelling. Their argument that malfeasance, fraud, forgery, inappropriate commissions, prudential failure, collusion, cheating life insurance policyholders and other transgressions are the result of “a few bad apples” long ceased to have credibility.
Treasurer Scott Morrison has turned on CBA, citing a dozen compliance issues, as well as failures by the board and management to meet public expectations that the culture will be cleaned up. In a highly unusual intervention, Reserve Bank governor Dr Philip Lowe in recent days attacked the banks – not just CBA – for a flawed culture and for being unduly driven by short-term profit. ASIC chief Greg Medcraft said he was “a little stunned” that CBA neglected to mention to him the alleged breaches of anti-money laundering rules. ASIC is now investigating whether the bank and its board breached the Corporations Act in their handling of the scandal.
These moves by ASIC and APRA can be seen as insufficient and belated. Given the importance of confidence in the financial sector, a royal commission is justified. The banks know it. But the buck stops in Canberra. A note from the editor – Subscribers can get Age editor Alex Lavelle’s exclusive weekly newsletter delivered to their inbox by signing up here: www.theage苏州夜总会招聘.au/editornote