31 August 2016
Article - #2016001, 2016

In the role of: Minister for Revenue and Financial Services [19 July 2016 - 28 August 2018]

Op Ed: Why a banking Royal Commission just won’t work

The strength of our banking system is critical for consumers and our economy. Whether you are a couple with a mortgage or a small business owner looking for finance, Australians interact with our financial system every day, and they must have confidence in it.

During the past decade we have seen misconduct exhibited by our banks and some of their employees. This is simply not acceptable.

That is why the Coalition Government has acted and is implementing the most significant package of reforms to the financial sector in recent history.

We are strengthening consumer protections, ensuring malpractice is detected and punished, and independently reviewing the consumer complaints and external dispute resolution framework, so that consumers can access justice and compensation in a timely manner.

The Coalition knows how important it is to have a regulator that is able to respond to misconduct and prosecute institutions and individuals who do the wrong thing; a regulator that has powers in excess of any Royal Commission.

We are committed to making sure that the regulator, ASIC, is well resourced and has the ability to not just act in response to misconduct, but also be proactive in preventing misconduct and harm.

The Government implemented a Capability Review of the regulator and accepted the recommendations for government.  We also announced a $127 million funding boost to improve industry behaviour and better protect consumers.

The Government has also made it crystal clear that the banks have a social licence and need to be accountable to the Australian people.

This is why the Turnbull government recently announced that the major banks will be called to appear at least annually before the Parliament.

We want to ensure that they have an opportunity to transparently account for their decision making and how they balance the needs of borrowers, savers, shareholders and the wider community.

For the Labor Party to propose a Royal Commission into banks is reckless and ill-conceived.

Critically, a Royal Commission would go over old ground and would delay well-developed and important reforms, such as lifting the professional standards for advisers.

A Royal Commission would send the signal internationally that the Government believes there are structural problems with our banking and financial system and could lead to significant repercussions for confidence, international investment, and our AAA credit rating.

Whilst the Government has proactively sought to reform Australia’s financial sector, Labor sat idle in Government and oversaw scandal after scandal, many of these at a time that the now Leader of the Opposition was the Minister for Financial Services and Superannuation.

The same scandals they now use to call for a Royal Commission.

In fact Labor opposed our review of the financial system and Chris Bowen when Treasurer declared “The financial system is strong, well-regulated and well managed and I have not seen a case for a full blown inquiry.”

The work the Government is already undertaking will provide ongoing scrutiny, greater resourcing and a stronger regulator, instead of a one-off, time consuming and expensive Royal Commission that will not benefit consumers or the Australian economy.