Malcolm Turnbull confirms royal commission into banking sector
After almost two years of speculation, the Prime Minister has announced an official royal commission into Australia's banking sector.
Prime Minister Malcolm Turnbull has today finally confirmed that an official royal commission into Australia's banking sector will go ahead following over 18 months of speculation. It's a move that the Labor party has been pushing for over several years. The commission will begin early 2018 and will run for 12 months before a final report is delivered on 1 February 2019.
In an interesting turn of events, following years of aggressive campaigning against a royal commission, the CEOs and Chairmen of the Big Four banks today released a joint letter to Treasurer Scott Morrison requesting an inquiry do go ahead. The letter read: "We now ask you and your government to act to ensure a properly constituted inquiry into the financial services sector is established to put an end to the uncertainty and restore trust, respect and confidence."
Despite believing these commissions are "costly and unnecessary distractions at a time when the finance sector faces significant challenges," the heads of Westpac, CBA, ANZ and NAB said all the speculation and uncertainty was "hurting confidence in our financial services system... and has diminished trust and respect for our sector and people." The letter expressed the banks' desires to go ahead with a royal commission in order to restore faith in the banks which they described as "unquestionably strong."
The Big Four outlined some requests as to how they believe the royal commission should be run in order to be the most effective and fair. Specifically, they wanted it to be led by an ex judicial officer, be free of any political influence, cover the core areas of banking including insurance and superannuation, and also that it should replace all other ongoing inquiries into the sector.
The Turnbull Government agrees the banks are undoubtedly strong
The pressure on Prime Minister Malcolm Turnbull to launch a royal commission into Australia's banks really fired up following comments he made at Westpac's 199th birthday celebrations in April 2016. At the event, he said there had been too many "troubling incidents" and that "our banks have not always treated their customers as they should."
The Labor Party took these comments and ran with them, launching a full-fledged campaign urging for a royal commission. The Turnbull Government has skirted around the topic since then, saying Australia's banks are undoubtedly strong and that a commission was not necessary.
In the Government's announcement this morning, its statement agreed with the Big Four that Australia's banking sector was "systemically strong", and that the continued speculation and hype surrounding a possible royal commission is "disruptive and risks undermining the reputation of Australia’s world-class financial system". The Government believes a royal commission will help restore trust in the banking sector, which will ensure stability and ongoing growth and efficiency in the sector.
Giving the banks some peace-of-mind, the Turnbull Government's statement said the royal commission "will not be a never-ending lawyers’ picnic", but instead will be "a sensible, efficient and focussed inquiry into misconduct and practices falling below community standards and expectations."
A royal commission does not come cheaply and is set to cost over $75 million with that cost ultimately worn by the Australian taxpayer. However, it should be a big leap towards rebuilding consumer trust in their banking and financial institutions which is a good thing.