Treasurer Scott Morrison plans to head off a royal commission into banks by boosting regulators' powers and resources.
Opposition Leader Bill Shorten says Australians need to see a better standard of ethics and culture within the banking sector,
- by
- Phillip Coorey
- Patrick Durkin
Treasurer Scott Morrison will meet the Australian Securities and Investments Commission this week as part of efforts to head off a royal commission into the banks by boosting regulators' powers and resources.
A senior Coalition source told The Australian Financial Review the government was fully aware of the political potency of Labor's call for a royal commission and was actively sharpening its response to avoid becoming wedged during the election campaign.
"No one wants to get caught flat-footed on this one. We know everyone has issues with the banks," he said.
Labor, too, stepped up its case on Tuesday, dismissing claims by the government that such bodies as ASIC were the equivalent of a royal commission.
"ASIC does a good job, but a royal commission into banking is the most serious form of inquiry that a government can commission on behalf of the people of Australia. It has broad ranging powers and it can look at systemic issues which ASIC simply can't," said Labor leader Bill Shorten.
Mr Shorten said Labor's call had "crystallised the thinking of millions of Australians".
"What I've said is what millions of Australians think, that we need to see a better standard of ethics and culture within our banking sector," he said.
In his first public comments since the furor erupted, ASIC chairman Greg Medcraft played down calls for a royal commission, saying he expected to get all the powers needed to better fight bad corporate behaviour.
Mr Medcraft said while a royal commission was a matter for government, ASIC already had strong coercive powers and more were expected to flow from recent reviews.
Fact sheet released
In a sign of the political sensitivity, the government released a "fact sheet" comparing the powers of ASIC and a royal commission.
"We've already had a Senate inquiry, we've had the Murray financial system inquiry, we have just had a capability review; there are some very good recommendations which have come out of the Murray inquiry in relation to powers, a product intervention power, reviewing the penalties, bringing in a user-pays funding model for ASIC, we think they are great and the government is looking at those," Mr Medcraft said.
"We do have the power to request documents, to compel testimony, metadata access, undertake searches and most importantly the ability to charge people...so not only do we have the power to investigate we have the power to prosecute."
He repeated his criticism that the $120 million in budget cuts inflicted by the Abbott government and another $47 million from an "efficiency dividend" had hampered ASIC's ability to monitor banks and stop the scandals before they occur.
Trust 'dented'
Mr Medcraft admitted trust in the system had been "somewhat dented" and said the budget cuts had limited the regulator's ability to conduct proactive surveillance.
Mr Medcraft, who is seeking reappointment as ASIC chairman as his tenure expires in a month, was thrust into the centre of the royal commission debate after launching legal action against Westpac Banking Corp last week. This follows a similar case against ANZ Banking Group that kick-started a debate on banking culture. Mr Medcraft says the cases should give the public confidence he is tackling the big cases.
Up to eight Coalition backbenchers support or are open-minded about a royal commission. But South Australian Liberal Senator Sean Edwards pushed back on Tuesday, saying it would not be warranted.
Mr Morrison met the Australian Prudential Regulatory Authority, which has primary responsibility for bank regulation, on Monday and will meet ASIC this week.
Read more: http://www.afr.com/news/politics/morrison-to-meet-asic-as-bank-war-worsens-20160411-go3zxc#ixzz45bKCLQkU
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