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| Bank bosses will be forced to explain their actions every year, Malcolm Turnbull announces | Bank bosses will be forced to explain their actions every year, Malcolm Turnbull announces |
| (21 days later) | |
| Bank bosses will have to front up to a parliamentary committee annually to explain their actions on interest rates and other behaviour under new rules announced by Malcolm Turnbull. | Bank bosses will have to front up to a parliamentary committee annually to explain their actions on interest rates and other behaviour under new rules announced by Malcolm Turnbull. |
| The announcement came as Bill Shorten ramped up pressure for a royal commission into the banks, saying the industry would only respect the government if such an inquiry were implemented. | The announcement came as Bill Shorten ramped up pressure for a royal commission into the banks, saying the industry would only respect the government if such an inquiry were implemented. |
| The prime minister said the move would ensure the big banks were regularly accountable to elected members in the same way as the Reserve Bank or the Australian Prudential Regulatory Authority (APRA). | The prime minister said the move would ensure the big banks were regularly accountable to elected members in the same way as the Reserve Bank or the Australian Prudential Regulatory Authority (APRA). |
| Turnbull said the banks would appear before the house committee on economics. This would avoid the scrutiny of the Senate where long time campaigners on bank behaviour, such as Nationals senator John Williams, Greens senator Peter Whish-Wilson and Labor’s Sam Dastyari reside. | Turnbull said the banks would appear before the house committee on economics. This would avoid the scrutiny of the Senate where long time campaigners on bank behaviour, such as Nationals senator John Williams, Greens senator Peter Whish-Wilson and Labor’s Sam Dastyari reside. |
| Asked how the government would enforce the requirement to appear, Turnbull said “the parliament has powers but they won’t be necessary, the banks will certainly appear”. | Asked how the government would enforce the requirement to appear, Turnbull said “the parliament has powers but they won’t be necessary, the banks will certainly appear”. |
| Steven Munchenberg, chief executive officer of the Australian Bankers Association (ABA), said while the federal government was entitled to the move, no other commercial businesses were required to justify pricing decisions in this way. | Steven Munchenberg, chief executive officer of the Australian Bankers Association (ABA), said while the federal government was entitled to the move, no other commercial businesses were required to justify pricing decisions in this way. |
| “We are confident banks can explain why the interest rates they set for borrowers are determined largely by the cost of funds and the pressures of a highly competitive market, not the Reserve Bank cash rate,” Munchenberg said. | “We are confident banks can explain why the interest rates they set for borrowers are determined largely by the cost of funds and the pressures of a highly competitive market, not the Reserve Bank cash rate,” Munchenberg said. |
| The requirement is only for the big four banks, Commonwealth, ANZ, National Australia Bank and Westpac – though the committee does have the power to call anyone it chooses. | The requirement is only for the big four banks, Commonwealth, ANZ, National Australia Bank and Westpac – though the committee does have the power to call anyone it chooses. |
| Morrison, who spoke to the banks prior to the announcement, said the government was frustrated over the banks failure to pass on the interest rate cut and needed to do practical things to increase transparency. | Morrison, who spoke to the banks prior to the announcement, said the government was frustrated over the banks failure to pass on the interest rate cut and needed to do practical things to increase transparency. |
| “Clearly the intention of the Reserve Bank by cutting the rates was to see it pass through and follow through into the broader economy so obviously the extent to which that is not achieved actually frustrates the intention of the bank in making that decision and this is why we are frustrated,” Morrison said. | “Clearly the intention of the Reserve Bank by cutting the rates was to see it pass through and follow through into the broader economy so obviously the extent to which that is not achieved actually frustrates the intention of the bank in making that decision and this is why we are frustrated,” Morrison said. |
| The economics committee which will scrutinise the banks is yet to be reformed after the election. | The economics committee which will scrutinise the banks is yet to be reformed after the election. |
| Turnbull said the process would provide ongoing accountability, rather than a one off investigation and report under a royal commission. But it is unclear whether the economics committee would have additional powers – such as those available to a royal commission – to compel witnesses, take evidence in camera, provide parliamentary privilege for witnesses or impose any penalties for non-compliance. | Turnbull said the process would provide ongoing accountability, rather than a one off investigation and report under a royal commission. But it is unclear whether the economics committee would have additional powers – such as those available to a royal commission – to compel witnesses, take evidence in camera, provide parliamentary privilege for witnesses or impose any penalties for non-compliance. |
| “They’ve got the opportunity to build confidence or they might, when they contemplate being more open and more accountable ... contemplate changing some policies and practices as a consequence,” Turnbull said. | “They’ve got the opportunity to build confidence or they might, when they contemplate being more open and more accountable ... contemplate changing some policies and practices as a consequence,” Turnbull said. |
| Shorten said the moved showed Turnbull was “in the pocket of the banks”. | Shorten said the moved showed Turnbull was “in the pocket of the banks”. |
| “There is nothing Mr Turnbull won’t do to protect the big banks from a Royal Commission,” Shorten said. | “There is nothing Mr Turnbull won’t do to protect the big banks from a Royal Commission,” Shorten said. |
| “After giving them a $7bn tax cut, he’s now inviting them to lunch in Canberra once a year so he can wag his finger at them. This is a friendly catch-up, not an investigation.” | “After giving them a $7bn tax cut, he’s now inviting them to lunch in Canberra once a year so he can wag his finger at them. This is a friendly catch-up, not an investigation.” |
| It comes after recently retired Reserve Bank board member John Edwards backed an inquiry into the banks and Turnbull called on the industry to pass on the full cut in the cash rate announced by the Reserve Bank earlier this week. | It comes after recently retired Reserve Bank board member John Edwards backed an inquiry into the banks and Turnbull called on the industry to pass on the full cut in the cash rate announced by the Reserve Bank earlier this week. |
| “The banks will only respect the government if the government is serious about a royal commission. Nothing less is going to make the banks respect the politicians,” Shorten said earlier in the day. | “The banks will only respect the government if the government is serious about a royal commission. Nothing less is going to make the banks respect the politicians,” Shorten said earlier in the day. |
| Williams also renewed his call for a royal commission. | Williams also renewed his call for a royal commission. |
| “I have been seven years trying to fix up this industry and getting people to listen,” Williams said. | “I have been seven years trying to fix up this industry and getting people to listen,” Williams said. |
| “We have been through the financial planning scandals, bad advice, Ponzi schemes, managed investment schemes, and even the life insurance industry is now under scrutiny. | “We have been through the financial planning scandals, bad advice, Ponzi schemes, managed investment schemes, and even the life insurance industry is now under scrutiny. |
| “Banks should realise they are in the public spotlight and they are doing little to instil public confidence in them. It seems to be profit before people. I’ve always supported a royal commission.” | “Banks should realise they are in the public spotlight and they are doing little to instil public confidence in them. It seems to be profit before people. I’ve always supported a royal commission.” |
| Williams was involved in a Senate inquiry into financial advisers at the Commonwealth Bank. NAB, ANZ and Westpac have faced rate rigging allegations. Asic is also investigating Comminsure – the insurance arm of the Commonwealth Bank – which has been accused of manipulating reports to avoid life insurance payouts to sick and dying customers. | Williams was involved in a Senate inquiry into financial advisers at the Commonwealth Bank. NAB, ANZ and Westpac have faced rate rigging allegations. Asic is also investigating Comminsure – the insurance arm of the Commonwealth Bank – which has been accused of manipulating reports to avoid life insurance payouts to sick and dying customers. |
| But new cabinet minister Matt Canavan, who had previously supported a royal commission, told Guardian Australia he no longer supported one, due to increased funding to the Australian Securities and Investments Commission (Asic). | But new cabinet minister Matt Canavan, who had previously supported a royal commission, told Guardian Australia he no longer supported one, due to increased funding to the Australian Securities and Investments Commission (Asic). |
| “The government has responded with substantial investments in Asic and the powers that Asic has match or exceed those of any royal commission. A royal commission would be a distraction from Asic doing its job.” | “The government has responded with substantial investments in Asic and the powers that Asic has match or exceed those of any royal commission. A royal commission would be a distraction from Asic doing its job.” |
| A royal commission can be established only by the government. It cannot be forced by legislation. As a result, Labor is considering using the parliamentary committee process to start an inquiry, with a view to pressuring the government if further evidence of bad banking practice is revealed. | A royal commission can be established only by the government. It cannot be forced by legislation. As a result, Labor is considering using the parliamentary committee process to start an inquiry, with a view to pressuring the government if further evidence of bad banking practice is revealed. |
| With the final Senate results now clear, the Senate crossbench includes four from Pauline Hanson’s One Nation, three from Nick Xenophon’s NXT party, Jacqui Lambie, Liberal Democrat David Leyonhjelm, Family First’s Bob Day and Derryn Hinch’s Justice Party. | With the final Senate results now clear, the Senate crossbench includes four from Pauline Hanson’s One Nation, three from Nick Xenophon’s NXT party, Jacqui Lambie, Liberal Democrat David Leyonhjelm, Family First’s Bob Day and Derryn Hinch’s Justice Party. |
| Whish-Wilson has also long campaigned on cleaning up the banking sector and has supported a royal commission, as does Lambie. But Whish-Wilson told Guardian Australia that Australia needed to move beyond Senate inquiries that deliver “headlines for politicians and no changes to law and no justice for victims of these repeated white-collar crimes”. | Whish-Wilson has also long campaigned on cleaning up the banking sector and has supported a royal commission, as does Lambie. But Whish-Wilson told Guardian Australia that Australia needed to move beyond Senate inquiries that deliver “headlines for politicians and no changes to law and no justice for victims of these repeated white-collar crimes”. |
| “If I was to support more Senate inquiries I would want to see [them] push the limits of what the Senate can do with its powers. | “If I was to support more Senate inquiries I would want to see [them] push the limits of what the Senate can do with its powers. |
| “[An inquiry] would need to be properly resourced and be willing to compel witnesses from within banks and financial services companies, starting with every single board member and working our way down through the CEO and management through to the workers.” | “[An inquiry] would need to be properly resourced and be willing to compel witnesses from within banks and financial services companies, starting with every single board member and working our way down through the CEO and management through to the workers.” |
| Whish-Wilson would only support a Senate inquiry that not only compelled witnesses to appear but was properly resourced, as the previous Senate inquiry did not have the funds to hold banks to account. He also called for whistleblower protection. | Whish-Wilson would only support a Senate inquiry that not only compelled witnesses to appear but was properly resourced, as the previous Senate inquiry did not have the funds to hold banks to account. He also called for whistleblower protection. |
| “I do not want to build up hopes of victims that the banks are going to be properly held to account and justice delivered, if that promise cannot be fulfilled,” Whish-Wilson said. | “I do not want to build up hopes of victims that the banks are going to be properly held to account and justice delivered, if that promise cannot be fulfilled,” Whish-Wilson said. |
| Xenophon promised to work with Labor and the crossbench to keep pressure on the financial services industry. He supports the royal commission Labor proposes for the banking industry, but he says the approach through the parliament needs to be targeted. | Xenophon promised to work with Labor and the crossbench to keep pressure on the financial services industry. He supports the royal commission Labor proposes for the banking industry, but he says the approach through the parliament needs to be targeted. |
| “We need to have a compensation scheme of last resort,” he said. | “We need to have a compensation scheme of last resort,” he said. |
| “Having a royal commission for the sake of beating up the banks might make some people feel good, but it won’t do much good. It needs to be much more comprehensive than that. For instance, I think commercial banks that don’t pass on the full interest rate cut should face a statutory obligation to take out a full-page newspaper ad to explain why.” | “Having a royal commission for the sake of beating up the banks might make some people feel good, but it won’t do much good. It needs to be much more comprehensive than that. For instance, I think commercial banks that don’t pass on the full interest rate cut should face a statutory obligation to take out a full-page newspaper ad to explain why.” |
| But Steven Munchenberg, chief executive officer of the Australian Bankers Association (ABA), said a royal commission was unnecessary given the banks had already put measures in place. | But Steven Munchenberg, chief executive officer of the Australian Bankers Association (ABA), said a royal commission was unnecessary given the banks had already put measures in place. |
| “The industry has put in place initiatives to fix issues that Bill Shorten has said are the reasons for a royal commission,” Munchenberg said. “We acknowledge there are problems but rather than having a royal commission we would like to fix them immediately.” | “The industry has put in place initiatives to fix issues that Bill Shorten has said are the reasons for a royal commission,” Munchenberg said. “We acknowledge there are problems but rather than having a royal commission we would like to fix them immediately.” |
| Earlier this year, the industry established a number of initiatives in response to the scandals, promising to set up a consumer advocate, a register for individuals involved in past malpractice, protection for whistleblowers, an independent review of banking codes of practice, and an independent review of commissions for financial products. | Earlier this year, the industry established a number of initiatives in response to the scandals, promising to set up a consumer advocate, a register for individuals involved in past malpractice, protection for whistleblowers, an independent review of banking codes of practice, and an independent review of commissions for financial products. |
| Munchenberg said the cash rate, which was cut by 0.25 percentage points to a record low of 1.5%, did not mirror banking costs. He said banks did increase deposit rates to attract more funds. | Munchenberg said the cash rate, which was cut by 0.25 percentage points to a record low of 1.5%, did not mirror banking costs. He said banks did increase deposit rates to attract more funds. |