The lucky stroke crippled me and gave me a new life. Now I'm just unbelievably good looking and modest. Always turn a little to the left.
13 Apr 2016
Banking royal commission should be paid for by banks
Exert from an article in the CONVERSATION
In the face of the cultural and ethical failings we have seen recently with the Commonwealth Bank’s financial advisers and ANZ’s alleged rigging of interest rates, the question is one of conduct. Before we have our own subprime disaster, what can we do to improve the conduct of our banks?
ASIC’s Medcraft says the regulator “can’t look over every person’s shoulder”, and that it’s “up to gatekeepers to think about their culture so we don’t get the wrong outcomes”.
Asking that question – how to improve the culture of our banks - involves asking for information which may be incriminating. The people asking the questions, in order to arrive at credible answers, need the power to compel those answers. If compelled by a royal commissioner, the answers would have to be given publicly.
Banks, of course, are worried. There can be no doubt their employees have engaged in practices that they don’t want aired. So they’re pushing back. They claim it would be a distraction. But being held accountable should never be regarded as a mere distraction.
We shouldn’t be duped into thinking we are not allowed to hold to account the same banks that we, as taxpayers, are called upon to underwrite. Our federal government supported our banks during the financial crisis using taxpayer’s funds. That gives taxpayer’s the right to enquire. Given tens of thousands of consumers were affected by the financial advice scandal, and that every person in Australia would have been affected by interest rate rigging, we not only have a right to enquire, we have a duty.
The Turnbull government has argued we don’t need a royal commission because we just completed the Financial System Inquiry. But that inquiry was almost entirely macro-prudential, and concerned with long term economic issues. It did not look at the conduct of individual banks, or investigate ethical and cultural issues at all. The second argument the Turnbull government puts forward is that we don’t need a royal commission because we have regulators with adequate powers to do this job. But that’s exactly the point: we need a royal commission precisely because the regulators are not doing their job.
Banks, through their chief lobby group, the ABA, say a royal commission would be hugely expensive, and that taxpayers should not have to pay. Fair point. Taxpayers should not have to pay. Obviously someone must pay, and in light of the fact that this commission would be called to investigate longstanding malpractices by banks – banks that have had notice of these issues and failed to resolve them - it seems only fair that banks should have to pay. Perhaps by way of a special levy?
Fundamentally the problem remains: we have banks that have allowed behaviour to go on which in certain circumstances is criminal; much is unethical; tens of thousands of Australians have been left devastated. Our regulators have failed to effect real, deep, cultural change in our banks. The Financial System Inquiry’s findings are not relevant. The banks are wealthy enough to afford, and are deserving of, footing the bill for a royal commission. And even they would benefit from the opportunity to clean house.