Turnbull backflips on banks probe

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?

Related articles:
Turnbull pens bank probe script
Super cruelled by banks’ tactics
Public reaction is priceless
The letter that started it all
Industry leaders have their say
The political perspective
Watch the PM’s spin on RC backflip
Have your say on the royal commission
Pollies, pundits and the media respond

Written by Janelle Ward

RELATED LINKS

Royal commission findings have already been decided by PM

Turnbull launches ‘nothing to see here' banking royal commission.

The jig is up, time to bring banks to justice

‘This has been a systematic, long-term culture of breaking the law.'

Australians welcome royal commission with scepticism and humour

Australians have long called for a royal commission and now that they have one …

The letter that launched a royal commission into banking

Read the letter that launched a royal commission into the banking and finance sector.

Industry leaders have their say on the royal commission

The advice comes thick and fast after Turnbull's announcement.

Move surprising, until it all made perfect sense

Let's consider more closely the context of the PM's apparent 180 degree change of direction.



SPONSORED LINKS

LOADING MORE ARTICLE...