Government launches banking and finance Royal Commission
(27 November 2017 – Australia) Australia’s Prime Minister Malcolm Turnbull reversed the Coalition Government’s longstanding opposition to Royal Commission into the banking and finance industry, while Australia’s major lenders called for a “properly constituted inquiry”.
The Prime Minister announced the A$75 million inquiry, saying speculation about the commission was moving into “dangerous territory” that was putting the banking sector and the Australian economy at risk.
“The speculation about an inquiry cannot go on,” Prime Minister Turnbull told reporters in Canberra.
“It’s moving into dangerous territory where some of the proposals being put forward have the potential, seriously, to damage some of our most important institutions.
“We have got to stop the banks and our financial services sector being used as a political football.”
The government’s announcement follows a joint letter from the Big Four’s chief executives asking calling for the government to launch an inquiry in an email sent to Treasurer Scott Morrison.
“It is now in the national interest for the political uncertainty to end,” the chief executives said.
“It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people. It also risks undermining the critical perception that our banks are unquestionably strong.”
Treasurer Scott Morrison has said the Royal Commission a “regrettable but necessary action”.
Government reforms to strengthen oversight and penalties in the banking sector undertaken in the past year would not have been possible if a Royal Commission had been launched earlier, Treasurer Morrison said in a joint press conference with the Prime Minister at Parliament House.
“All these reforms and actions would not have occurred had the government agreed to undertake this action earlier, such actions would have been unnecessarily delayed,” he said.
“Nor would such action prior to this time have been in the national economic interest.
“But the nature of political events means the national economic interest is now served by taking what I describe as a regrettable but necessary action.”
Morrison added that he had consulted with Treasury, the governor of the Reserve Bank of Australia and the chair of APRA.
They agreed it was a “regrettable but necessary course of action” to take control “given the uncertainty, disruption, and damage being done by political events”.
Prime Minister Turnbull has given the Royal Commission just 12 months to report back to government.
It will be required to report back by February 1, 2019.
“This should not be a commission that runs forever, costing many hundreds of millions of dollars, as would’ve been the case under some of the proposals,” Turnbull said.
“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.
“It will cover the nation’s banks, big and small, wealth managers, superannuation providers, insurance companies.
“It will be a comprehensive inquiry.”
Subscribe