Government finally concedes on need for banking inquiry

Government concedes speculation could not go on.

prime minister malcolm turnbull

In an extraordinary backflip, Prime Minister Malcolm Turnbull announced a royal commission into the financial services sector this morning, labelling the move “regrettable but necessary”.

The announcement followed an email from the heads of the four major banks to Treasurer Scott Morrison telling the Government it was time to act “in the national interest”.


Key points:

  • The royal commission will investigate the banks, big and small, wealth managers, superannuation providers and insurance companies.
  • It will be chaired by “an eminent and respected ex judicial officer”.
  • A final report is due by February 1, 2019.
  • The estimated cost is $75 million.

The banks had previously argued that an inquiry into a series of scandals that has plagued the industry and caused a widespread lack of public trust was unwarranted and costly at a time when the sector was facing a raft of challenges.

However, they said this morning: "It is now in the national interest for the political uncertainty to end. It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people. It also risks undermining the critical perception that our banks are unquestionably strong.”

Mr Turnbull said the speculation about an inquiry could not be allowed to go on.

“It's moving into dangerous territory where some of the proposals being put forward have the potential, seriously, to damage some of our most important institutions.”

Investors reacted quickly to the news. When trading opening this morning, CBA shares dropped 2.2 per cent, Westpac 1.7 per cent, ANZ 1.3 per cent and NAB 1.2 per cent.

The royal commission will run for 12 months although Mr Turnbull quickly qualified that timeline, saying “being realistic about this, royal commissions take longer than originally planned”.

Australian Bankers Association Chief Executive Anna Bligh described the royal commission as “an extraordinary and unprecedented step”.

“The banking and finance sector of Australia is one of our most important global industries,” she said.

“It is one of the most significant contributors to the global economy. It is too important to put in the hands of minor parties and fringe elements of the parliament.”

How do you feel about this announcement? Are you surprised at the PM bowing to bank pressure? Do you think there’s an ulterior motive?

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    COMMENTS

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    Golden Oldie
    30th Nov 2017
    5:21pm
    Of course there is an alternative motive. Labor have been pushing this for a long time, now suddenly when Turnbull gets the OK from the banks, we suddenly have this being done. LNP are desperate to try and win over the population for the next election, after the Queensland election was won by Labor. The banks feel more at ease with diddling the public under LNP.
    GeorgeM
    1st Dec 2017
    12:04am
    Of course it is all about the next election - to neutralise this as an issue. Noting Turnbull saying "being realistic about this, royal commissions take longer than originally planned", one can forget about any outcomes before the next election - which may be in the next few months given the citizenship issues!
    LiveItUp
    30th Nov 2017
    5:36pm
    Looks like banks are now worth buying.
    Kathleen
    30th Nov 2017
    5:37pm
    Ha ha, the commission will have no teeth. It is what the banks will allow!
    Anonymous
    30th Nov 2017
    6:58pm
    Let's hope not.
    Not a Bludger
    30th Nov 2017
    5:52pm
    Absolutely unnecessary.

    Yet again Turnbull and his cadre have fallen to the lefties.

    They certainly go to water at the hint of a whiff of grapeshot.

    Our Liberal party is destroyed and our most senior pollies have taken to their toes.
    Anonymous
    30th Nov 2017
    7:00pm
    Og gawd. Right-wing blindness from NaB. The Royal Commission is absolutely NECESSARY.

    "Our" Liberal Party? Not mine, mate. I don't own vermin.
    Rae
    1st Dec 2017
    8:40am
    I'd say they have fallen to their very own fascist far right controllers. The Liberals do well when they can keep those crazies in the closet.
    Old Geezer
    30th Nov 2017
    6:14pm
    Awesome. Glad to see the banks pulling the strings.
    Stev
    30th Nov 2017
    6:54pm
    What a joke these people are treating the public like fools, the banks have given the go ahead and most likely approved the terms, you don't have any enquiry unless you have some idea of the result the banks are treating the government like the fools they are, if the government what the real story they would be setting this up them selves and in control not being controlled

    30th Nov 2017
    7:54pm
    We need a Royal Commission into Turnbull, Abbott, Shorten, Bernardi, Hanson, Dastyari, Joyce, Katter, Trump etc etc etc ...... gee the list is near endless.

    30th Nov 2017
    8:40pm
    Pure politics at play. Two by-elections in progress, both coalition members, some National Party members have threatened to cross the floor and join with Labor so Royal Commission announced by Turnbull. This will allow the government to set the parameters of the Commission which gives a measure of control.

    In reality, the banks can justify nearly all of the things that people have been screaming about, especially interest rates. The banks will claim that the market sets the rates and they have to go overseas to source funds. Fees will be another area where the banks will try and claim that they only charge out-of-pocket recovery and this will be hard to disprove.

    As regards the debacle over super funds lost by cowboys who were paid on commission and were mainly unsupervised, the banks will claim that those people have either left the employment or have been counselled. I think that the proposed Royal Commission will disclose very little about the banks but I have no idea how the wealth managers, superannuation funds or insurance companies will fare. Be careful what you ask for.
    Rusty
    30th Nov 2017
    9:35pm
    Who determines the terms of reference for this royal commission?
    Now that the banks have agreed it smells of a white wash
    Anonymous
    30th Nov 2017
    9:42pm
    Menzies was quoted as saying that a Royal Commission should only be called if the outcome was known. The government sets the terms of reference and chooses the Commissioner who will be, without question, an honourable man but one who can only work within the parameters set for him. In other words, a whitewash.
    MICK
    30th Nov 2017
    10:56pm
    Chaired by "an eminent and respected ex judicial officer"? Lets wait and see who this "eminent" person is. Justice Hayden perhaps? And of course the real question will be whether or not there is a show or a genuine far ranging inquiry and tough rules after that which banks cannot avoid.
    I am yet to be convinced that what we have heard today is fair dinkum and the fact that a cost of $150 million was mentioned earlier in the day and now $75 million worries me that we may already have seen a watering down of this when the ink is still wet.
    I'll believe this is above board when I see it and if the banks have called for a RC then I smell a rat. Are we seeing a cat and rat game?
    On the Ball
    30th Nov 2017
    10:56pm
    Did I read that this Royal Commission will include the finance AND Superannuation industries?
    Hmmm.
    So the banks suggested the Royal Commission. Odds are they will set the agenda, and even more odds on they'll be closely examining industry super funds as part of that agenda.
    Gee, I wonder what the recommendations will be?
    (Cant wait to get their hands on it can they).
    Snowflake
    1st Dec 2017
    8:10am
    The banks knew a Royal Commission was coming. All they have done is preempted the inevitable making themselves look like the good guys. And there is no doubt that this whole thing was set up by the LNP and the banks long before the public heard about it. Another snow job by the government, which thinks the public are too stupid to see through the spin and bullshit that politicians are trained to deliver. Bullshit and spin 101, LNP style.
    hmmm
    1st Dec 2017
    8:17am
    at the end of the day we can decide this, collectively we can send one of these banks broke.
    It's called people power. long over due, the opposite to apathy, which is our easy going attitude.


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