Banking royal commission can’t distract from banking sector’s delicate balance

Banking royal commission can’t distract from banking sector’s delicate balance

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On the first and second days of the hearing, Rowena Orr, QC, walked National Australia Bank's executive general manager ...

On the first and second days of the hearing, Rowena Orr, QC, walked National Australia Bank’s executive general manager of broker partnerships, Anthony Waldron, through the corrupting of its “introducer” program.Jason South

Australia’s federal government has announced a royal commission into the financial services sector, following a letter from the big four bank heads supporting the move.

The commission will run for 12 months, delivering a final report in February 2019, at an estimated cost of A$75 million. It will explore not only banking but also the wealth management, superannuation and insurance industries.

Prime Minister Malcolm Turnbull had previously denied the need for a royal commission but said in announcing the move that political uncertainty had forced the decision.

“Uncertainty…over the potential for such an inquiry is starting to undermine confidence in our financial system. And as a result, the national economy. And that is precisely what we have always been determined to avoid,” he said.

The commission should be allowed to go on for longer, for closer to three years, because the 12-month period is the bare minimum, says Andrew Schmulow, a senior lecturer in the faculty of law at University of Western Australia.

“If the commission doesn’t find other skeletons in the closet, I will eat my hat,” he adds.

Schmulow believes there will be more revelations to come from the commission and that the banks will have to answer for covering up these as well.

“You can’t have this many scandals on this kind of scale without a corporate culture that is rotten to the core,” he said.

The royal commission won’t award compensation but will have the powers to compel the banks and other institutions to present documents and witnesses.

Earlier in the year, in an attempt to fend off a royal commission, the government announced a raft of new measures in the 2017 Federal Budget to address concerns surrounding the finance industry.

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