The Turnbull government has announced that a royal commission inquiry will be conducted in regards to the conduct of Australia’s big 4 banks. After a great deal of political pressure from both sides of parliament the lenders have withdrawn attempts at a lobbying campaign against a royal commission.
The multi-million dollar lobbying campaign that included television advertisements asserted that an inquiry would be a damaging distraction for Australia’s economy. The campaign was dropped after the banks acknowledged that the demand for a royal commission had become unstoppable and that the political uncertainty of the situation was damaging public trust.
The co-signed letter by Australia’s big 4 banks (Commonwealth, ANZ, Westpac and NAB) withdraws their historic opposition to an inquiry and specifically asks for one to be conducted. They noted that the continued political uncertainty was going to undermine the confidence of off-shore investors.
The Turnbull government has asserted that the royal commission would restore trust in the banking system and aid the economy by increasing consumer confidence. The commission is set to cost roughly 75 million Australian dollars and run for 12 months, with findings scheduled for February of 2019.
The public inquiry will investigate the conduct of the banks, insurers, financial service provides and pensions funds. The commission will consider whether or not regulators have enough power to handle cases of misconduct.
The Turnbull government has stated that the commission is not designed to diminish capitalism or promote mistrust in Australia’s banks.
There have been multiple scandals related to Australia’s biggest lenders with reports of over financial planning, rate-rigging and insurance fraud. The Commonwealth bank was accused in August of breaching anti-laundering laws as their ATM’s accepted deposits from unknown card holders for large amounts.
The Labor party had been demanding a commission take place for several months in light of the scandals taking place. With members of Turnbull’s own party threatening to force a vote on the issue, the letter by the banks has given the prime minister the political cover needed to reverse his former stance.
Financial analysts have stated that this is primarily a public relations move by the banks and is unlikely to drastically change the conduct of the industry. In the wake of the announcement of the royal commission shares in each of the 4 banks had gone down ranging from 2.7 – 1.7 percent.
Australians and the rest of the world will have to wait to see what overall impact this commission will have on the behaviour of the nation’s big lenders.