The fallout from the Royal Commission’s inquiry into misconduct throughout the financial sector revealed many secrets, and now the chief executives of Australia’s Big Four banks will face questioning in parliament this week.
This questioning should examine how these bosses allowed unethical practices to initially take place and continue after their exposure. Australian politicians want to find out if the banks plan to stop this misconduct from ever happening again and whether a change of culture is already underway.
CEOs from Westpac, Commonwealth Bank of Australis (CBA) and ANZ will be appearing this week, while an executive from the National Bank of Australia (NAB) will face questioning from parliament next week.
This will be the first time that bank leaders have had to answer inquiries since the initial findings from Royal Commissioner Kenneth Hayne’s interim report came out just over a week ago
Topics of discussion will likely focus on reforming or capping bankers’ bonuses, determining whether the current practices of providing financial advice and mortgage lending needs more regulation and finding out if the financial sector can regain the public’s trust and behave properly.
Although banks have all given official statements, politicians in parliament are looking to take the opportunity to show the public that this misconduct will not undermine the Australian economy. Their questions will further explore how the banks will reform some of their practices and keep these issues from cropping up again. The executives will then return to the Royal Commission inquiry in late November before it makes a final review and report early next year.
Liberal MP Tim Wilson, the committee chair for parliament believes that the Big Four banks need to confirm that customers will not receive negative treatment because of the changes. He noted the ‘failure to enforce existing rules” by regulators.
Wilson said this “raises questions around culture and process and how they are going to respond” and expects the questioning to give a clearer picture of the course of action.
Labor MP Matt Thistlethwaite, the committee’s deputy chair, said that he wants to know how this culture of malpractice was able to “pervade the industry” and said that it should have been clear that change was necessary.
Greens MP Adam Bandt said that there should be a ban on banks owning wealth management companies, as this presents a conflict of interest. This is part of his party’s manifesto.
With most of the Big Four already announcing that they will shed these divisions, the committee is seeking to clarify if these are “irreversible” changes or whether they could occur again in the future.
While the executives expect much of the questioning to revolve around the revelations in the interim report, a discussion should also take place on whether it is suitable to allow the employment of advisers to sell wealth management products. This may result in some financial institutions breaking up further.
The banks will likely say that they have already been working on implementing changes to prevent further financial misconduct.