Labor flags Royal Commission into banks
7 April 2016
http://www.afr.com/news/politics/labor-flags-royal-commission-into-banks-20160407-go0lsh
Federal Labor could hold a Royal Commission into the banking sector if it wins this year's federal election.
A day after Prime Minister Malcolm Turnbull excoriated the banks for their culture of greed and warned they would lose their social contract if they did not clean up their act, Labor will go further and flag the inquiry should it form government. Labor leader Bill Shorten mounted the case on Thursday, just hours after the government ruled out the option.
He said Mr Turnbull was all talk and no action on the issue. " I think Australians are sick of politicians who talk tough and do nothing. I think it's frankly quite contradictory. Mr Turnbull is there giving some sort of lecture to the banks, then he wants to propose corporate tax cuts," he said.
"It's time for Mr Turnbull to stop ruling out quickly the option of the Royal Commission and instead start listening to what every day Australians are saying and they don't like the bad behaviour of banks.
"I don't think you can rule it out quickly. I think Australians are saying it's bad behaviour. If there was a building worker tradie, the Government is over them like a rash examining their behaviour. The top end of town, the banks, the Government is so quick out of the blocks to rule out a Royal Commission, it's breathtaking."
Several sources told The Australian Financial Review that Labor's shadow cabinet had been discussing the idea for some time and this week's revelations that the Australian Securities and Investments Commission was investigating Westpac for the alleged manipulation of the bank bill swap rate were the final straw.
The decision will put pressure on the government given Mr Turnbull's strong words and growing calls from within the Coalition for a Royal Commission. On Thursday, federal Queensland Liberal MP Warren Entsch joined the clamour for a Royal Commission.
"A Royal Commission into the immoral conduct of the Big Banks and the introduction of compulsory financial retribution for victims – including those in the Far North – is critical," he said. Mr Entsch said he agreed that in many ways, the country's large banking institutions have not been acting in the best interests of their clients.
"This has been proven recently with both AMP and Westpac paying compensation to clients as a result of providing poor financial planning advice, and Tuesday's announcement that ASIC will start action in the Federal Court against Westpac," he said.
"I welcome the Prime Minister's recognition of problems within the sector but an apology from the Big Banks and a commitment not to do it again in the future is not enough.
"I believe we need to go further - we need a full Royal Commission into the profit-driven and immoral activities of the Big Banks and they must pay an appropriate level of compensation to clients for past wrongs."
The Greens Senator Peter Whish-Wilson repeated his call for a Royal Commission while, on Wednesday, Nationals Senator John Williams, has been targeting bank misbehaviour since he entered Parliament in 2008 and has been calling for a Royal Commission for the past 18 months, did the same.
"It just goes on, when is it going to stop?" he said. "We get dog products, dog advice in a culture of profit, profit, profit and to hell with everyone's security."
But on Thursday, Finance Minister Mathias Cormann said there was no need for a Royal Commission into the sector which has reeled from scandal to scandal in recent years. "Our banking system is well regulated," Senator Cormann told the Seven Network.
He said Mr Turnbull had been right to remind the banks of their social responsibilities but rejected suggestions the banks had been getting off lightly when exposed for ripping off customers.
"I would completely reject the proposal that we are letting white collar crime get off easy," he said. "Whenever anybody does anything wrong, they have to have the book thrown at them."
Mr Turnbull said taxpayers had provided "vital support" in the form of guarantees to the banks "during the darkest days of the global banking crisis in 2008" and many Australians "are asking today 'has our banking sector done enough in return for this support?'."
He said there had been too many instances to ignore. 'Some, regrettably as we know have taken advantage of fellow Australians and the savings they've spent a lifetime accumulating seeking only dignity and independence in their retirement,' Mr Turnbull said at a Westpac lunch in Sydney.
Labor frontbencher Jim Chalmers said Turnbull's criticism was "weasel words and waffle" without proper resourcing for ASIC. "I don't think one speech by the prime minister at a party to celebrate the birthday of one of the banks is sufficient to get to the bottom of these issues," he told ABC Radio.
Former Commonwealth Bank chief executive David Murray, who led the 2014 Financial Systems Inquiry, has sided with the banks. He said on Thursday there was no need for a Royal Commission.
"I can't see here evidence of entrenched corrupt behaviour," Mr Murray told ABC radio. "There could be some illegal behaviour - and there's been a lot of activity in the banking sector since the crisis - but it's up to the banks to fix it."
Earlier this week, Mr Murray told The Australian Financial Review's Banking and Wealth Summit that ASIC was acting like Adolf Hitler for championing the idea that company directors should be held legally responsible for poor corporate culture.
Read more: http://www.afr.com/news/politics/labor-flags-royal-commission-into-banks-20160407-go0lsh#ixzz456rzmzLs
Follow us: @FinancialReview on Twitter | financialreview on Facebook