A parliamentary committee stacked with Liberal and National MPs has slammed the big four banks for failing to fire a single senior executive after a string of scandals.
These executives created a “poor compliance culture” at the big banks and “repeatedly failed to protect the interests of consumers”, according to a highly critical report issued by the Standing Committee on Economics on Thursday.
“This is a culture that senior executives have created. It is a culture that they need to be held accountable for.”
The lengthy report was the culmination of three days of public hearings held in Canberra in early October, where the CEOs of the Commonwealth Bank, Westpac, ANZ and NAB were grilled by the committee.
The Liberal-National government was forced to hold the inquiry after huge popular support for Labor and the Greens’ proposal of a royal commission into the banks.
Many Australians are angry at record profits, delays in passing on interest rate cuts and a string of scandals, including alleged manipulation of the bank bill swap rate, a key benchmark.
Senior executives guilty of significant breaches should not only be fired, but also publicly named and shamed, the House of Representatives committee recommended.
But, as anticipated by The New Daily, the report called for the creation of a banking tribunal rather than a royal commission, angering Labor, the Greens and the union that represents bank workers.
‘Fails to deliver’
The Labor members of the committee issued dissenting reports criticising the process as a “stage-managed circus”.
“This inquiry was established by the government to avoid a royal commission into Australia’s banking industry,” the Labor MPs wrote.
Adam Bandt, the only Greens MP on the committee, issued his own minority report, which also supported a royal commission.
“This inquiry has confirmed that the big four banks enjoy a cosy and privileged position in Australian society, making large profits off the back of the kind of implicit (and explicit) taxpayer support other businesses can only dream of,” Mr Bandt wrote.
The Finance Sector Union (FSU) slammed the report as the equivalent of “calling bank bosses to Canberra for a friendly cup of tea and a chat”.
“We need a royal commission to take a long hard look at Australia’s banks financial sector and make recommendations about proper reform,” FSU national secretary Julia Angrisano said.
“But instead of a serious inquiry Malcolm Turnbull has established a toothless tiger that won’t result in the changes banking and finance workers and customers desperately need.”
The Australian Bankers’ Association said in a statement it supported many of the proposals, and would await the government’s response.
A royal commission into the banking sector was last held in Australia in 1936-37.
Key recommendation: a bank tribunal
If the government heads the official report, a new bank tribunal will be created, fusing three of the four existing complaints forums into a single body, paid for by the finance sector.
It would consume the functions of the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO), and the Superannuation Complaints Tribunal.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) would presumably remain untouched.
Gerard Brody, head of the Consumer Action Law Centre, previously told The New Daily there was a need for consolidation, but that the “very accessible” and “not legalistic” FOS should remain.
“We’re not convinced a new tribunal will meet those benchmarks around accessibility and providing fair outcomes,” Mr Brody said.
The committee also recommended continual monitoring of competition in the sector, which it said is dominated by the “oligopoly” of the big four banks.
Despite several questions from Liberal MPs about tracker mortgages, the committee did not recommend that the banks be forced to offer these products, which move up or down in unison with the Reserve Bank cash rate.
Read the full list of recommendations here: