Yes, the Morrison government has said meekly, to everything the banking royal commissioner Kenneth Hayne has recommended.
In political terms, it’s blindingly obvious why. A federal election is in sight. The Coalition is vulnerable on this issue, having spent years obstructing a deeply necessary inquiry that unearthed a trove of malfeasance – case studies that still beggar belief. Scott Morrison at one point opined rashly that calls for a royal commission into the banking sector (after a string of scandals that, in the end, proved the tip of the iceberg) were a “populist whinge”.
To do anything other than saying “yes Kenneth, thank you Kenneth” would have been politically untenable, and the Coalition is desperate to avoid a fight with Labor on Big Bad Banks, its preferred territory.
By saying yes, and pronto, the government is hoping to shut a potent political issue down, burying it in a blizzard of worthy implementation.
So it’s yes to more than 24 potential prosecutions (only Westpac escapes), earmarked carefully by Hayne but ultimately left to the discretion of the regulators – which will be a relief to the government, rather than particular bankers being named and shamed; yes to ending conflicted remuneration; yes to an overhaul of mortgage broking; yes to a regulator to watch the corporate and banking regulators (and a possible new independent prosecutorial body if they fail to get their act together); yes to Asic becoming a regulator that actually likes going to court; yes to an industry-funded compensation scheme of last resort.
There is one maybe in the government response and that relates to remuneration for mortgage brokers. Hayne says the borrower, not the lender, should pay the mortgage broker a fee for acting in connection with home lending. The government says sure, but we have to be wary about the impact of that change on competition (which means we don’t want the big banks to dominate the market).
Hayne, in his final pass at the banks, points the finger squarely at Australia’s largest financial institutions, and says their boards and senior executives bear primary responsibility for the poor conduct laid out in his commission over many months. The commissioner says the time has come to do more than say sorry for the past, and make reparations.
With a big mop-up job to implement, the treasurer Josh Frydenberg, as well as trying to neutralise a dangerous political fight, has taken the opportunity to project some emotional intelligence with the government response. The financial services sector, he says, has breached…
