Banks set up special units to respond to Canberra's probe
Australia's big banks are ready to establish special departments to coordinate their responses to a commission of inquiry as their chairmen continue talks with Treasurer Scott Morrison in a last ditch attempt to placate rebel Nationals and avoid the parliamentary investigation.
Each major bank has designed a framework to respond to a royal or parliamentary inquiry, including setting up special units to serve as a conduit of information between banks' teams of lawyers and staff who will be required to supply information to prepare senior executives called as witnesses.
The divisions will manage the discovery process and help banks' boards of directors manage their duties of continuous disclosure.
Each unit will be staffed by dozens of permanent staff who will then be able to call upon several hundred people in each bank, across the executive, legal, corporate affairs, communications, compliance and products ranks. The new units will manage liaising with the commission of inquiry' secretariat, the government and the media.
The units will work closely with the phalanx of lawyers which have already been retained by the major banks to prevent them falling foul of the commission's expansive legal powers. Commonwealth Bank is using Herbert Smith Freehills, Westpac Banking Corp has retained Allens, National Australia Bank is working with King & Wood Mallesons and ANZ Banking Group has turned to Ashursts.
Legal sources suggested former High Court chief justice Robert French or former High Court justice Ken Hayne would be possible commissioners. But before the banks switch on their response plans, management is hoping their chairmen and Mr Morrison can work out a compromise in the form of the proposed victims compensation panel.
Banking sources said the proposal will give the panel extensive powers to investigate and potentially compensate every customer compliant against a bank since 2007 which has not already been the subject of a court determination.
Some in the banks are also hoping Prime Minster Malcolm Turnbull will accept National Senator Barry O'Sullivan's call for the government to formally take over the process because the banks consider a royal commission called by the executive will be easier for the government to control.
Numerous meetings were taking place across banks' senior management ranks on Tuesday although group executives were also being encouraged to keep focus on core businesses; for example, a meeting of the Commonwealth Bank's executive committee focused on the government's data and open banking plans rather than royal commission politics.
The Australian Prudential Regulation Authority and Australian Securities and Investments Commission are also bracing for the inquiry; the terms of reference say it will examine whether the "existing regulatory system is sufficient" to control banks, including "whether the agencies regulating the conduct of those providers are effective in ensuring that those providers do not engage in unethical or unlawful conduct".
APRA and ASIC could also have a role enforcing any commission of inquiry recommendations, with the terms of reference giving the commission power to disclose to APRA or ASIC information relating to the failure of an institution to comply with laws administered by those regulators.