Don’t stop with banks, hit in­sur­ers & su­per too

The Sunday Telegraph (Sydney) - - OPINION -

THERE’S a rev­o­lu­tion hap­pen­ing in Aus­tralia — it’s called peo­ple power and it’s start­ing with your money.

Royal Com­mis­sioner Ken­neth Hayne’s in­terim re­port into the be­hav­iour of big banks has set the tone for what is likely to be a pre-elec­tion pe­riod dom­i­nated by politi­cians telling us they’re on our side.

Scott Mor­ri­son has caught the mood al­ready, and be­gan his prime min­is­ter­ship with the prom­ise he was on “your side”.

He fol­lowed that up with a prom­ise to hold a royal com­mis­sion into the aged-care sec­tor — an­other area where cus­tomers (or res­i­dents as the sec­tor prefers to call them) are of­ten the last con­sid­er­a­tion in the prof­it­mak­ing ma­chine that the aged-care busi­ness has be­come.

Mr Mor­ri­son’s next chal­lenge will be how he deals with the banks, post-royal com­mis­sion, hav­ing been party to the Turn­bull gov­ern­ment’s ex­treme re­luc­tance to hold the in­quiry in the first place.

Mr Hayne, in his in­terim re­port, in­di­cated where he is go­ing with his fi­nal rec­om­men­da­tions. He harshly crit­i­cised the banks lack of com­pe­ti­tion and abuse of their gov­ern­ment-pro­tected mo­nop­oly sta­tus, and slated the fail­ure of the reg­u­la­tors Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion (ASIC) and Aus­tralian Pru­den­tial Reg­u­la­tion Au­thor­ity (APRA).

If we could of­fer Mr Mor­ri­son some ad­vice, it would be to an­tic­i­pate Mr Hayne’s rec­om­men­da­tions by thor­oughly clean­ing out both reg­u­la­tors right now. That means sack­ing se­nior staff and find­ing new peo­ple who are not part of the cosy fi­nance world — that is, peo­ple who didn’t go to pri­vate school and univer­sity with the banks’ se­nior ex­ec­u­tives — to run them. Maybe the world of law en­force­ment and polic­ing would pro­vide some use­ful can­di­dates.

Next, crack down on mort­gage bro­kers, fi­nan­cial ad­vis­ers and the other clingers-on around the edges of bank­ing. Ban trail­ing com­mis­sions. Im­pose “plain English” lan­guage re­quire­ments on in­sur­ance prod­ucts, in­clud­ing fu­neral in­sur­ance, so cus­tomers un­der­stand what they’re buy­ing. Re­quire all in­sur­ers to of­fer bronze, sil­ver and gold pack­ages that are eas­ily com­pa­ra­ble. Look at im­pos­ing the same sim­ple, eas­ily com­pa­ra­ble struc­ture on mort­gages and busi­ness loans. And maybe go a lit­tle fur­ther — what about re­mu­ner­a­tion con­trols on bank ex­ec­u­tives?

That might sound overly re­stric­tive for a Lib­er­alNa­tional Coali­tion gov­ern­ment — but re­mem­ber, the gov­ern­ment is al­ready up to its neck in mar­ket in­ter­ven­tion with the banks. It’s too late to pre­tend this mar­ket can op­er­ate with­out gov­ern­ment in­volve­ment, let alone be trusted to po­lice it­self.

Next to cop in­tense scru­tiny, and be forced to change its be­hav­iour, will be the su­per­an­nu­a­tion and in­sur­ance sec­tors. Con­sumers are re­al­is­ing — thanks to the work of jour­nal­ists such as Sky News’ Adam Creighton, and our own fi­nance colum­nist Scott Pape — that they don’t have to take what’s dished out to them by big or­gan­i­sa­tions who put their in­ter­ests last.

None of this is hap­pen­ing in iso­la­tion. Our gen­er­a­tion is wit­ness­ing a dig­i­tal rev­o­lu­tion that has put vast in­for­ma­tion stores in the hands of every sin­gle one of us. We all have the world’s sum of knowl­edge in our pock­ets. The next step is trans­lat­ing that in­for­ma­tion into power, and us­ing the power wisely.


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