Monday, 12 February 2018

Royal Commission, Banks and Balderdash

I am wondering what to make of the Royal Commission commencing today.

Its brief is to look in to Financial Services. Concentration will be on the banking sector however insurance and superannuation funds have also been included.

Banks are an easy and popular target. We don’t like them. Well, not quite because we tend to think “our” bank is ok, it just the others we don’t like.

What annoys me about the Royal Commission is the basis under which it has come about.  The ALP and Greens have been going on about the need for a Royal Commission for some time while the Government has been rejecting the idea.

A Parliamentary enquiry in to banks was looking likely when some (right wing) Nationals started making noises about supporting the ALP/Green proposal. It was suggested they were annoyed at the passing of Marriage Equality and were looking to embarrass the Prime Minister who they held responsible for it.

The Prime Minister responded to the potential of such an enquiry by calling a Royal Commission.

By doing this, he maintained control over the terms of what could be investigated and added superannuation to the list. There is a strong, if not certain possibility he did this to annoy the ALP who are the architects of the not for profit superannuation system that dominates the retirement savings landscape.

The Government wants to change the make up of Industry Fund Boards; the ALP doesn’t.

The end result is a Royal Commission born out of Political point scoring. I am wondering if it will be effective.

We have had a raft of financial planning issues become public and much distress has been caused to many as a result of what occurred in Bank owned Financial Planning operations.

We have had allegations surface about money laundering as a result of improper transaction reporting practices.

There have been, and continue to be allegations of swap rate manipulations. Some have been admitted and settled while others are being defended.

In financial services, we have numerous acts of parliament overseen by multiple regulators

Would more be achieved, more quickly by having a proper independent investigation to determine the effectiveness of the regulators, what is expected of them and ensuring they are resourced correctly? From the outside looking in, it appears they are almost exclusively reactionary when a proactive approach to provide leadership and guidance to industry would be better.

Having an independent review to determine a simple set of standard objectives for all lenders and deposit taking institutions, investment managers, insurers and underwriters does not need a Royal Commission.

Reviewing the role of each regulator, determining their objectives and then deciding resource requirements does not need a Royal Commission.

However, the Royal Commission will achieve one objective.

Bank bashing will be front and centre of our daily news and will be a leading hashtag on Social Media.

Politicians will get air time and will have another topic over which to have a race to the bottom.

Employees in Banks and other institutions will begin to feel undervalued and ashamed of what they do.

And, will anyone be better off for it – other than Lawyers and Politicians?

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