Treasurer Josh Frydenberg didn’t hold back on Friday when he delivered a press conference to discuss the publication of the banking royal commission’s interim report, as he demanded better for the Australian public.
The deputy leader of the Liberal Party said the report from Commissioner Kenneth Hayne was a “frank and scathing assessment” of the Australian financial sector and hinted at the possibility of introducing new legislations to regulate the banks to prevent these malpractices from happening again.
“This interim report is a frank and scathing assessment of the culture, conduct and compliance of our financial system. Australians expect and deserve better,” he said.
“Australians expect their superannuation services, their are insurance services, their banking services, their financial advice to be delivered in a way that puts their interest first. That the consumer comes first, second and third. In fact, these financial entities have an obligation under their licence to act honestly, fairly.”
The publication of the interim report comes after four rounds of hearings, the first of which kicked off in March, which covered consumer credit, financial advice, small and medium (SMEs) lending and regional and remote banking.
Writing in the report’s executive summary, Hayne credited greed for the poor conduct of some of the country’s biggest banks. Offering an answer to the question ‘why did it happen?’, he said: “Too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty.”
Hayne added: “Banks, and all financial services entities recognised that they sold services and products. Selling became their focus of attention. Too often it became the sole focus of attention. Products and services multiplied. Banks searched for their ‘share of the customer’s wallet’. From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales.”
Anna Bligh, spokesperson for the Australian Banking Association, said: “Our banks have failed in many ways. Failed customers, failed to obey the law and failed to meet community standards. And all of these failures are totally unacceptable.
“Too many customers have been hurt and it has to stop. Too many customers – customers want to see a much better deal from their banks. Australians have every right to expect the world’s best banks. It is clear today that as an industry we have failed to deliver that.
Make no mistake, today is a day of shame for Australia’s banks. Having lost the trust of the Australian people, we must now do whatever it takes to earn that trust back”
Frydenberg, who only inherited the treasury portfolio last month after Scott Morrison replaced Malcolm Turnbull as prime minister, went on to describe the details that emerged throughout the royal commission as unacceptable, following stories of farmers being forced from their stations, and staff pressuring a young man with Down’s Syndrome into taking out an unnecessary policy.
“The behaviour that we have seen to date has been unacceptable,” Frydenberg added. “Fees charged to dead people, fees for no service, 300,000 plus breaches for providing insurance and advice that was unsolicited and against the rules.
“[There are] many other examples of conduct which is unacceptable. But now that it has been revealed, now that we have the interim report into next year, the final report, it is incumbent upon those in the financial services sector and those regulators who are charged with enforcing the law lift their game because the public deserve it and the public expected.”
Frydenberg also raised the question of whether the current law should be changed, or if it simply needs to be enforced more forcefully. He said: “Is different enforcement what is needed to have entities apply basic standards of fairness and honesty: by obeying the law; not misleading or deceiving; acting fairly; providing services that are fit for purpose; delivering services with reasonable care and skill; and, when acting for another, acting in the best interests of that other?
“The basic ideas are very simple. Should the law be simplified to reflect those ideas better”
The next round of hearings is due to start in November and will focus more on policy.