AUSTRALIA TO HOLD INQUIRY INTO FINANCE SECTOR
Year-long Royal Commission to look at conduct of banks, pension funds, insurers
THE government said yesterday it will hold a wide-ranging inquiry into a scandal-hit finance sector, arguing one was needed to restore public confidence as it reversed its long-held opposition amid mounting political pressure.
The year-long Royal Commission, which will look at the conduct of banks, pension funds, insurers and other financial services firms, will have the power to compel witnesses and recommend criminal charges.
It has the potential to be far more embarrassing for the industry than the regular parliamentary questioning of bank chief executive officers that Prime Minister Malcolm Turnbull has instigated in response to public outrage over scandals ranging from misleading financial advice to breaches of antimoney laundering rules.
“Uncertainty... over the potential for such an inquiry is starting to undermine confidence in our financial system and, as a result, the national economy,” said Turnbull.
“This is essentially a regrettable but necessary action. The political environment has created a sense of inevitability.”
The inquiry, which must report back by February 2019, will examine any conduct which “falls below community standards and expectations” and whether remuneration or governance practices have encouraged it, according to draft terms of reference published by Turnbull’s office.
Among Australia’s “Big Four” banks, Commonwealth Bank of Australia saw its shares fall the most on the news, losing 1.9 per cent.
It is facing a civil lawsuit from the federal anti-money laundering agency, which accuses it of enabling more than 50,000 payments of criminal proceeds.
Australia and New Zealand Banking Group Ltd and the country’s biggest investment bank Macquarie Group Ltd also lost ground, ending down one per cent and 1.5 per cent, respectively.
The commission, which will be headed by either a former or serving judge yet to be named, will be able to make wide-ranging recommendations including changes to legislation.
It won’t, however, have the power to order firms to pay compensation in relation to individual cases. Reuters