July 27, 2017
A repeated call by the Federal Opposition for a Royal Commission into banking and financial services, which would also include an examination of the work of regulators, has been rejected by the Federal Government and the Financial Services Council (FSC).
Addressing the FSC Leaders Summit, Shadow Treasurer Chris Bowen said no-one could defend the poor industry practices which led to ‘successive scandals’ and the Opposition wanted to ensure the regulatory, policy and cultural settings were in place to avoid future problems.
Bowen said this meant dealing with the evolving architecture of financial regulation and the roles and accountabilities of regulators remained transparent and properly scrutinised by Government.
“I am not proposing another full blown inquiry into the operation of our financial system – this was done recently – but that the Royal Commission deal with developments in financial regulation more broadly, and won’t just be in relation to poor behaviour,” Bowen said.
He also said that while the Financial Systems Inquiry two and a half years ago had made no recommendations to change the way ASIC and APRA operated, the ad hoc nature of legislative and regulatory changes since that time, and the rise of fintech, required a further examination of their work.
“…the Royal Commission has become an inquiry looking for something to inquire about”
“Given what has changed over the last couple of years and even in the last twelve months alone, the time is ripe for a proper, considered and comprehensive examination of our institutional arrangements – of the financial system architecture,” Bowen said.
This call was rejected the next day by the Minister for Revenue and Financial Services, Kelly O’Dwyer, who also addressed the Summit saying there had “…been a host of actions, inquiries and new bodies set up by this Government in response to those scandals”.
O’Dwyer added the Opposition was “…moving the goalposts of their proposed inquiry to new areas such as FinTech and looking at how our regulators work” and “…the Royal Commission has become an inquiry looking for something to inquire about”.
“We don’t want to see a repeat of these scandals. But nor do we need a formal, legalistic, endless talkfest following on from the sensible and considered reviews and reforms the Government has already put in place,” O”Dwyer said.
FSC Chief Executive, Sally Loane also questioned the purpose of a Royal Commission into the banking and financial services sector pointing out there had been 18 different reviews and inquires since 2007.
“Chris Bowen outlined Labor’s planned Royal Commission, making it clear that all superannuation funds would be included whilst also adding that they would do a stock take of APRA and ASIC. We would question why this couldn’t be done with a more simple inquiry, instead of an expensive and time-consuming vehicle like a Royal Commission,” Loane said in her address to the Summit.
“Our sector has undertaken substantial reform and remediation and our view is that a Royal Commission into financial services is not necessary,” Loane added.