New parliamentary report stops short of recommending royal commission into banking industry.
Executives in Australia’s major banks ought to be sacked and publicly named for significant regulatory breaches, according to new parliamentary report.
Australia should also establish a “one-stop” tribunal to make it easier for consumers and small businesses to complain about poor treatment by banks and financial advisers, it says.
But it has stopped short of recommending a royal commission into the banking industry.
Those are some of the recommendations from a parliamentary inquiry into Australia’s major banks, whose first report was published on Thursday.
The Turnbull government set up the inquiry in response to mounting pressure for a royal commission into the banking industry.
Chief executives from Westpac, ANZ, Commonwealth Bank, and NAB, were forced to appear before a parliamentary committee in Canberra last month as part of the inquiry.
The report’s recommendations include:
Banks must publicly report significant regulatory breaches within five days of reporting the incident to regulators. Such public reports should include a description of the breach and how it occurred, the names of senior executives responsible for the teams where the breach occurred and the consequences they faced, and an explanation of the reasons an executive is not dismissed (if in fact they are not).
The launch of a ‘one-stop’ banking and financial services tribunal to replace the existing external dispute resolution schemes by 1 July 2017.
Continual monitoring of competition in the banking sector by the competition regulator, and recommendations made every six months to the treasurer to improve competition in the sector.
The creation of a data sharing framework for consumer and small business data by July 2018.
A review of the regulatory barriers to starting a bank.
The committee chair, Liberal MP David Coleman, said if the recommendations were implemented they would substantially improve the banking sector.
Coleman said this first report would be added to in the future. “Banks must be much more accountable to consumers than they are today, and these recommendations will achieve that goal,” he said on Thursday.
But Labor and the Greens have issued dissenting reports. “This inquiry was established by the government to avoid a royal commission into Australia’s banking industry,” Labor’s report says.
“It has been a stage-managed circus from its beginnings … the only way to achieve any form of justice for the victims of the banks, and the only way to truly shine a light on the practices that drive unethical behaviour in the banking industry, is to hold a royal commission.”
The Greens said the inquiry confirmed the big four banks “enjoy a cosy and privileged position in Australian society”.
“This inquiry has also confirmed the big four banks think there is nothing wrong with the core of their vertically integrated business model, a model that creates a potential for conflict of interest between the customers’ best interest and subsidiaries encouraging people to buy financial products,” the Greens’ report says.
“[It] has generated more questions than answers, reinforcing the need for a wide-ranging royal commission into the big four banks and the broader financial sector.”
Coleman said chief executives of the major banks would be asked to attend another round of public hearings in February 2017.