BFCSA: Banking inquiry becomes Royal Commission alternative thanks to Labor

The Federal Opposition has established a Senate inquiry to investigate cases of wrongdoing in the banking and financial services industry.

The Senate voted 40 to 25 in favour of establishing the inquiry, which will also examine existing legislative and regulatory frameworks to ensure the entire industry has Australian consumers' best interests at heart.

In particular the inquiry will examine:

• The impact of misconduct in the banking, insurance and financial services industry on victims and on consumers
• The impact on consumers of executive and non-executive remuneration and incentive based commission structure and fee-for-no-service structures
• The culture and chain of responsibility  in relation to misconduct
• Failures that are evident in the regulatory or legislative frameworks for the protection of consumers
• The adequacy of legal advice and representation for victims of misconduct
• The availability and adequacy of redress and compensation for victims

In addition the inquiry will also include the impact on small businesses and the social impacts of consumer protection failures in the financial services industry.

In a statement Shadow Minister for Small Business and Financial Services, Senator Katy Gallagher said: "This committee will provide an immediate opportunity for people all around Australia to put their experiences on the record and give their opinion on what needs to change in Australia to better protect consumers into the future."

"But we know that only a Royal Commission can deliver the systemic, structural and cultural change that the banking and financial services sector needs," she said.

Consumer advocacy group CHOICE has welcomed the establishment of the Senate inquiry, claiming "sunlight is the best disinfectant."

"This inquiry gives us a chance to shine a light on the anti-consumer practices that are riddled throughout the banking system," CHOICE head of campaigns and policy Erin Turner said.

"From consumers being pressured to take out unaffordable home loans to people who are still picking up the pieces after receiving dodgy financial advice, this inquiry will look at all the ways the financial sector can leave people in financial ruin."

In a statement CHOICE said it would also like the inquiry to review the impact of vertical integration within the banking sector.

"While there have been a number of reviews into the financial sector over the last few years, no review has properly considered how the banks expansion into wealth, advice, broking and superannuation have impacted customer outcomes," Turner said.