Royal commission: John Howard in no rush to judge banks
The Australian 12:00am April 21, 2018
Adam Creighton
Former prime minister John Howard has declared it too early to tell whether the Hayne royal commission into misconduct in financial services will turn out to be worthwhile, defending banks’ freedom to set remuneration as they see fit.
In a wide-ranging interview to appear in The Australian next week, Mr Howard said he thought revelations at Kenneth Hayne’s commission in Melbourne were largely known to authorities, adding he “wasn’t going to speculate” on whether the government had been wrong to resist the inquiry.
A strident critic of the commission, which was announced under duress by the Turnbull government in December, Mr Howard said he would “prefer to wait” until the inquiry delivered its findings by February next year.
“I don’t for a moment condone any deceptive behaviour of either customers or of the regulatory authorities by any financial institution but I don’t want to pass judgment just on the basis of the evidence given over past few days,” he told The Australian.
A “fee for no service” scandal has engulfed wealth giants AMP and Commonwealth Bank in the inquiry’s third week of hearings, amid evidence the firms had knowingly taken fees from customers, including those who had died, without providing any services.
“I think it’s very, very important — in the wake of what has been widely publicised misbehaviour and sensational headlines — that we wait and not engage in knee-jerk reactions,” said Mr Howard, who was prime minister for almost 11 years until 2007.
“The great bulk of financial advisers and I’m sure bulk of employees at these institutions, AMP, the banks, have behaved in an ethical, honourable fashion.
“A whole group of men and women who’ve worked very hard … some of them have got bonuses and earned every penny of those bonuses.”
Mr Howard, who was also treasurer in the earlier Fraser government until 1983, said the government had no place limiting the structure of incentives legitimate businesses offered staff.
“I never liked to take away incentives; I think people should always be attracted by incentives. The question of whether they abuse their position to take advantage of the incentive is a test of their character. It should attract penalties when they do,” he said.
Bonuses linked to sales and profits, common in the financial services industry, have been criticised for encouraging poor conduct. Mr Howard said the banks were “very powerful” but the financial system was far more competitive than in the past.
“We’ve also got to remember we’re seeing some of the bad side of the whole financial apparatuses at the moment, but just remember when the financial crisis hit in 2008, our banks proved extremely stable,” he added.
The former prime minister also praised Energy Minister Josh Frydenberg for doing a “very good job” at building support for the Turnbull government’s national energy guarantee.
The remainder of Mr Howard’s observations will appear in The Australian next week.