Banking royal commission releases interim report


"Banks accept responsibility for their failures and right now they are working day and night to make things right for their customers".

Treasurer Josh Frydenberg has demanded the banks and regulators fix an insidious culture of "greed over honesty" outlined in the report.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg moved very quickly to deliver the interim report of the Royal Commission into Financial Services to the public.

But he said whatever the criticisms of the regulator, it was important to remember who perpetrated the misconduct.

Mr Hayne slammed the regulators ASIC and APRA for failing to mark and enforce the bounds of permissible behaviour, saying the misconduct either went unpunished or the consequences did not meet the seriousness of what occurred.

Australian Banking Association chief executive Anna Bligh described the report as "a day of shame for Australia's banks". "This is the report that Scott Morrison never wanted".

Mr Brody said the CALC will make further submissions to the royal commission highlighting delays and the way policy proposals get weakened, partly as a result of industry lobbying.

She said a Labor Government would extent the royal commission to hear the testimony of more victims.

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"Infringement notice-imposed penalties that were immaterial for the large banks".

Commissioner Kenneth Hayne said that the key question the commission had to answer was why misconduct had become so widespread. Enforceable undertakings might require a "community benefit payment", but the amount was far less than the penalty that ASIC could have properly asked a court to impose.

"The law already requires entities to "do all things necessary to ensure" that the services they are licensed to provide are provided "efficiently, honestly and fairly", Mr Hayne said.

"Too often, entities have been treated in ways that would allow them to think that they, not ASIC, not the parliament, not the courts, will decide when and how the law will be obeyed or the consequences of breach remedied".

"Their simplicity points firmly towards a need to simplify the existing law rather than add some new layer of regulation", Hayne writes in his report.

To date, the government has introduced a banking executive accountability regime, increased civil and criminal penalties for financial misconduct, set up a one-stop shop to resolve complaints (the Australian Financial Complaints Authority), appointed a "special prosecutor" and given ASIC $70.1 million for a revamped strategy and enforcement.

"This interim report is a frank and scathing assessment of the culture, conduct and compliance of our financial system".

"They're more profitable in Australia than in any other advanced industrial country and that's due to their higher fees and what we've seen is a litany of misconduct where people have been charged without services", he added. Not covered in the interim report were superannuation and insurance, canvassed in the fifth and sixth rounds of hearings. The major lender was questioned during the Royal Commission hearings over the use of the HEM benchmark and admitted to "at least 20 events of misconduct or conduct falling below community standards and expectations in relation to home lending and residential mortgages".