Banks look to reforms
Legal breaches claim to force their hand
ACCUSED of many breaches of the law, Australia’s big banks are today expected to propose to the banking royal commission reforms to their scandal-plagued consumer lending divisions.
The banks were last night rushing to meet today’s 4pm deadline to lodge 25-page responses to a raft of allegations that they all may have broken the law.
Closing the first round of hearings in Melbourne last month, counsel assisting the commission Rowena Orr, QC, invited the banks to respond to the accusations tabled.
A series of scandals involving the mortgage market, credit cards, car loans and other banking products and services were scrutinised during the hearings, from March 13 to 23.
Ms Orr told commissioner Kenneth Hayne that based on evidence produced during the hearings, it was open for him to find that the banks had breached the Corporations Act and the National Credit Act.
Sources at all the major banks yesterday said they were expecting to meet the deadline to submit their responses.
When the commission formally opened on March 13, Mr Hayne criticised the banks for dragging their feet in preparing detailed lists of misconduct going back half a decade.
One banking insider yesterday said the lenders would need to come to the table with realistic reforms to their systems after the commission unearthed so many problems.
“(They will) offer constructive suggestions for industry improvement on various matters raised where appropriate,” the source said, adding that the banks would likely try to provide detail about how their processes work and how they complied with relevant legislation.
In her closing statement, Ms Orr questioned remuneration structures at the banks.
She noted there were risks tied to the commissions paid to mortgage brokers, volumebased commissions on offer for bank staff and payments for third parties who referred prospective mortgage customers.
Ms Orr also posed questions around the need to tighten credit card standards and the so-called household expenditure measure.
The next round of public hearings for the commission is due to begin on April 16.