Turnbull announces royal commission into banking sector

Prime Minister Malcolm Turnbull and Treasurer Scott Morrison address the media during a joint press conference at Parliament House in Canberra on Thursday 30 November 2017. fedpol Photo: Alex EllinghausenThe Turnbull government will establish a royal commission into misconduct in Australia’s banking sector.

Prime Minister Malcolm Turnbull announced the backflip on Thursday after bank CEOs called on the government to establish an inquiry to end the uncertainty plaguing the sector.

“The speculation about an inquiry cannot go on,” Mr Turnbull said.

“It’s moving into dangerous territory where some of the proposals being put forward have the potential, seriously, to damage some of our most important institutions.”

MELBOURNE, AUSTRALIA – SEPTEMBER 22: Generic ‘Big Four Banks’ – ANZ Bank, Commonwealth Bank, NAB Bank and Commonwealth Bank. General view of people walking past bank atms on 22 September, 2015 in Melbourne, Australia. (Photo by Paul Rovere/Fairfax Media) Generic banks

The royal commission will run for 12 months.

The CEOs and chairmen of the Commonwealth, Westpac, National Australia and ANZ banks made the request in an email sent on Thursday to Treasurer Scott Morrison.

It comes amid mounting pressure on the coalition government from Labor and some Nationals MPs for the establishment of a royal commission into the nation’s banks.

The banks have consistently argued that further inquiries into the sector, including a royal commission, were “unwarranted” as they were costly and unnecessary distractions at a time when the sector faced significant challenges.

But in the email to Mr Morrison, they said in light of recent speculation, it was now “imperative” for the government to act decisively to deliver certainty to the sector, bank customers and the community.

“It is now in the national interest for the political uncertainty to end,” the email says.

“It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people. It also risks undermining the critical perception that our banks are unquestionably strong.

“We now ask you and your 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.”

The banks said the inquiry should be led by an eminent and respected ex judicial officer; its terms of reference should be “thoughtfully drafted and free of political influence”; its scope should cover the community’s core concerns; report back in a timely manner; and it must replace other ongoing inquiries.

The email was signed by ANZ chairman David Gonski and chief executive Shayne Elliott, CBA chairman Catherine Livingstone and CEO Ian Narev, NAB chairman Ken Henry and CEO Andrew Thorburn, and Westpac chairman Lindsay Maxsted and CEO Brian Hartzer.

Mr Turnbull has repeatedly denied any need for a royal commission after a series of scandals in the banking sector, but Nationals senator Barry O’Sullivan believes he has the numbers to go ahead without cabinet approval.

More to come

with BusinessDay

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