Australian Banking Royal Commission final report release
(4 February 2019 - Australia) The finance and banking Royal Commission final report will be publicly released this afternoon at 4.10pm with the market ready to interpret and digest Commissioner Kenneth Hayne’s recommendations and the credit markets already showing signs of tension and strain.
The Royal Commission could propose banks be broken up to avoid conflicts of interest, push for changes to renumeration, tighten borrowing regulations, enforce tougher disincentives for bad behaviour by regulators and push for charges against banks and senior executives. During 68 days of hearings, and in more than 10,000 public submissions, the inquiry exposed misconduct from charging dead people for services, lying to regulators, and pushing people into poorly-performing products to meet bonus targets.
In Commissioner Hayne’s interim report he warned against further regulation for small business banking but hinted that better disclosures and protections could be effective. Measures are expected to focus on the overhaul of conflicted remuneration, clearer and more enforceable laws and a commitment to take responsibility for misconduct from the ‘top down’. In regard to small business lending, Royal Commissioner Hayne stated “The evidence and submissions provided to the commission did not reveal any great appetite to change the legal framework” but noted more information to those acting as guarantors for small business was probably required. The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) will receive a high level of attention as market. Both regulators have issued mea culpas and promised to improve, but that can be only assessed in time. Key stakeholders are closely monitoring potential recommendations for criminal inquiries and charges against companies or individuals recommended by counsel assisting the inquiry in several instances including Ms Rowena Orr QC, Mr Michael Hodge QC, Mr Albert Dinelli, Ms Eloise Dias and Mr Mark Costello. The government has proposed a A$210 million cap for corporate civil offences in legislation currently before the Senate aimed at sharpening corporate penalties. However, Labor is pushing to dump the cap for a maximum fine of ten per ent of revenue, which would see CBA liable for a fine of more than A$4 billion.
Treasurer Josh Frydenberg said "What we are seeking to do is proceed in a careful and considered manner about something which is very important to the community and very important to the economy. We want to have a strong stable banking system, but one where then public has confidence in our financial institutions. We want a system where the public can trust their financial advisors, and can trust their banks, because we need a strong and healthy and well-regulated banking system. But we also want to ensure that there is the free flow of credit, that’s affordable and accessible to the public. Because credit is part of the blood of the economy, we need the free flow of credit and we’ll be obviously carefully considering that in terms of responding to the royal commission. What we also want to ensure is that we continue to support small businesses, and we continue to support a healthy financial system that delivers better consumer outcomes. They are the government’s priorities and they will influence and determine our final and formal response to the royal commission's report."
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