Prime Minister Malcolm Turnbull has announced a royal commission into misconduct in the nation’s financial sector.
Australia’s four big banks called on the federal government to set up the inquiry into their own sector after months of growing political pressure.
The CEOs of the Commonwealth, Westpac, National Australia and ANZ banks made the request in an email sent on Thursday to Treasurer Scott Morrison.
Prime Minister Malcolm Turnbull has announced a royal commission into misconduct in the nation’s financial sector
The banks have since last year fought off calls for a royal commission in the face of mounting pressure on the coalition government from Labor and Nationals MPs.
Now, the bank chiefs agree an inquiry is needed to restore public trust and confidence after taking in a collective net profit of almost 30 billion this year.
The inquiry will be run by a former or serving judicial officer for 12 months, reporting back to the federal government by February 2019, Mr Turnbull said on Thursday.
The terms of reference will ensure a comprehensive investigation into how financial institutions have dealt with cases of misconduct in the past, and whether those examples expose issues of cultural and governance issues, Mr Turnbull said.
But the big banks want the inquiry widened to cover the insurance and superannuation sectors and foreign banks.
‘It is now in the national interest for the political uncertainty to end,’ they wrote in the email dated November 30.
‘It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people.’
The bosses acknowledged that while their banks hadn’t always ‘got it right and have made mistakes’, they had since 2014 taken steps to improve what they do.
A strong, well-regulated banking system was in the interests of all Australians, they added. The stability of Australia’s banks was key to the nation being spared the worst of the economic ramifications of the 2008-2009 global financial crisis.
‘We now ask you and the government to act to ensure a properly constituted inquiry into the financial services sector is established to put an end to the uncertainty and restore trust, respect and confidence,’ they said.
The CEOs want the inquiry to be run by an eminent and respected ex-judicial officer.
The terms of reference should be ‘thoughtfully drafted and free of political influence’.
And they want its scope to cover core community concerns including banking, insurance, superannuation and non-Australian deposit-taking financial institutions.
