In a bid to neuter calls for a banking royal commission, the Turnbull Government has released its terms-of-reference for the parliamentary standing committee tasked with examining the Big Four banks’ lending practices:
The Treasurer has asked the committee to hold public hearings at least annually with the four major banks focusing on:
• domestic and international financial market developments as they relate to the Australian banking sector and how these are affecting Australia
• developments in prudential regulation, including capital requirements, and how these are affecting the policies of Australian banks
• the costs of funds, impacts on margins and the basis for bank pricing decisions, and
• how individual banks and the banking industry as a whole are responding to issues previously raised in Parliamentary and other inquiries, including through the Australian Bankers’ Association’s April 2016 six point plan to enhance consumer protections and in response to Government reforms and actions by regulators.
Talk about a bunch of Dorothy Dixer questions. If this committee had any teeth it would address issues like:
- the banks’ over-exposure to housing lending and under-exposure to business lending, and whether this is desirable;
- evidence of dodgy lending standards and mortgage fraud (see here, here, here and here);
- the growing complaints of poor practice and banking scandals, and what is being done to address them?
- commission arrangements and whether they are degrading the quality of advice, inflating costs and worsening outcomes for consumers?
- the relationship between the banks and regulators, and whether there is regulatory capture; and
- the use of public subsidies (explicit or implied) to support the banks’ risk-taking.
In any event, there are already several ad hoc investigations set-up to examine various forms of banking malfeasance, including the above parliamentary committee, the investigation into BBSW rorting (by ASIC and New York courts), a remuneration inquiry set up by the banks themselves, as well as the Government’s investigation of unconscionable conduct around small business.
Rather than having a whole bunch of disparate committees looking at separate issues, why not bring them all together under one overarching umbrella for a single diagnosis and treatment?
Australia needs a warts-and-all banking royal commission, not this type of rubbish set up purely to deflect voters’ attention.
