The long-awaited final report of the banking royal commission was released on Monday.
Commissioner Kenneth Hayne recommended sweeping changes for the troubled sector. You can read his key points here.
This is how the main players reacted.
Treasurer Josh Frydenberg promised the government would take “immediate” action on the report’s recommendations.
“My message to the Australian community today is that your government is committed to making this happen. In responding to this report and taking action on all 76 recommendations, we are putting in place the legislative framework which provides the regulators with the powers and the resources to hold those who abuse our trust to account,” he said.
During his press conference, Mr Frydenberg responded to the key criticism the government will face — that it resisted a royal commission for too long.
“Treasurer, were you wrong to oppose a banking royal commission for 16 months? And given that history, why should voters trust you now to act on this report?” one reporter asked.
“Well, we could debate for hours the failures when Labor was last in office,” he replied.
“I recall Bill Shorten saying how fantastic the sector was when he was the minister for the sector. But he didn’t call a royal commission or take action to bring these big banks to account. He didn’t put in place new standards, which we have announced today, and have been doing since the Financial System Inquiry was initiated by this government when we first came to power in 2013.”
Needless to say, Labor didn’t accept that answer.
“Scott Morrison and the Liberals should be condemned for voting against the banking royal commission 26 times,” Bill Shorten and Chris Bowen said in a statement.
“Mr Morrison called the royal commission ‘regrettable’, a ‘populist whinge’, delayed action for more than 600 days, and wants to give the big banks a $17 billion handout.
“The Liberals have shown they cannot be trusted to clean up the banks. They are too out of touch and only stand up for the top end of town.”
They described Mr Hayne’s report as a “dark day for Australian banking” and a “terrible indictment on the greed in the industry”.
“We pay tribute to the victims of banking misconduct, the whistleblowers and the advocates for making this day happen.”
CBA CEO Matt Comyn said the bank would “work through the impact” of Mr Hayne’s recommendations over the next few days.
“We note that the commissioner has concluded that a number of matters regarding the Group’s conduct, including in relation to superannuation, warrant further investigation by relevant regulators and we will co-operate fully with these investigations,” Mr Comyn said.
“We will update the market as appropriate, noting that we will release our half year results on Wednesday.
“The Royal Commission has been a thorough and valuable process for everyone — bank customers, financial services institutions, regulators and policy makers. It has highlighted failings both in our business and across the wider financial services industry.
“As challenging as the Royal Commission process has been, CBA will be a better bank as a result.”
Mr Comyn said the bank was addressing its “past failings” and implementing important changes, including a new Code of Conduct.
“There is still much work ahead to earn back trust, but we are determined to restore broad respect and support for the important role that a major financial institution like CBA has to play in our economy and community.”
NAB’s response was significantly shorter, saying only that it would review the report.
“National Australia Bank notes the release today of the final report of the royal commission into the banking, superannuation and financial services industry and the federal government’s response.
“NAB will now review the report, which contains 76 recommendations, and the government’s response to fully understand the implications for the NAB Group.
“We will provide further updates as appropriate.”
Mr Hayne singled out NAB in his report, saying it “stands apart” from the other three major banks and taking aim at its CEO Andrew Thorburn and Chair Ken Henry.
“Having heard from both the CEO, Mr Thorburn, and the Chair, Dr Henry, I am not as confident as I would wish to be that the lessons of the past have been learned,” he said.
“Overall, my fear — that there may be a wide gap between the public face NAB seeks to show and what it does in practice — remains.”
The Finance Sector Union said Mr Hayne’s bark “has proved to be worse than his bite”.
“These are mostly cosmetic changes rather than structural. Some media describe the recommendations as ‘explosive’. If explosive is a penny bunger rather than a stick of dynamite, then maybe,” the union said.
“It looks like Hayne is a big fat nothingburger in respect to executive pay and bonuses.
“It looks like Hayne has squibbed it on self-regulation. We can hear the champagne corks popping.”
The union did welcome the recommendation to end grandfathered commissions, reform fees and require mortgage brokers to work for the best interests of borrowers.
Mr Hayne criticised regulatory agencies, particularly ASIC, for failing to sufficiently enforce the law.
In response, ASIC said it “will consider the report carefully”.
“The Royal Commission report identified ASIC’s enforcement culture as the focus of change needed at ASIC. This focus accords with ASIC’s change agenda, that has included the adoption of our ‘why not litigate?’ enforcement stance, the initiation of our Internal Enforcement Review and the enhancement of our governance structures,” it said.
“ASIC notes the serious matters referred by the royal commission of possible breaches of financial services laws. Consideration of these matters will be prioritised. ASIC does not, as a general policy, comment on actual or potential investigations.”
The Australian Prudential Authority struck a similar tone.
“The commission’s final report is a considered and fair assessment of failings in the financial system and a helpful road map for reform,” chairman Wayne Byres said.
“The commission’s recommendations are wide-ranging. Within them, the commission has identified a number of areas where APRA’s prudential and supervisory framework can and should be strengthened.
“Many of these improvements are already in train, and APRA is committed to delivering on them. APRA appreciates the commission’s acknowledgment that increasing the intensity of supervision will require additional resources.”
THE BANKING ASSOCIATION
Former Queensland premier Anna Bligh, who is now CEO of the Australian Banking Association, admitted the report “lays bare how banks have too often failed their customers and let down the Australian people”.
“Banks understand that these failures have caused deep hurt, suffering and heartache for far too many customers and they’re sorry for the pain they have caused,” Ms Bligh said.
“Importantly, banks accept full responsibility for these failings and they know that they must now change to ensure that this never happens again.”
She said the banking industry had already formed a special taskforce to start fixing its problems.
“The industry sees this report as a road map. It is a road map to drive the change that is needed to earn back the trust of the Australian people. Today is an opportunity for banks to reset their relationship with their customers.”
Asked about the report’s recommendations about mortgage brokers — for example, requiring them to be paid by borrowers, not lenders — Ms Bligh was more circumspect.
“We’ve only had a chance to look at this for about 3.5 hours,” she said.
“There are some recommendations that we’d like to take the time to look at in more depth to make sure that they are in the best interests of customers. One of those is in the area of changes to mortgage broking payments.
“I think there are some very radical suggestions here that need some very careful thinking before they are rushed into.”
Business Council chief executive Jennifer Westacott called Mr Hayne’s recommendations “common sense but far-reaching”.
Our financial services sector is incredibly important to our way of life. Australians cannot be subjected to a system where they cannot access a loan to buy a new home or set up or expand businesses that provide jobs. Millions of Australians also have their retirement savings invested in banks,” Ms Westacott said.
“We look forward to working with political leaders and the community to ensure Australia’s financial system is stronger, and restoring trust in a sector which has helped to deliver a record 27 years of economic growth.”
She said it was important to make sure any changes are carefully considered before they are implemented, to ensure credit remains available to Australians and competition is strengthened.
“This means changes should be staged with appropriate consultation and reviewed to make sure consumers are better off.”