Pressure for a Royal Commission into banks had been building up since 2014 when a Senate report called for one and the big banks started apologising for giving poor financial planning advice. Former PM Malcolm Turnbull had rejected the idea repeatedly, the banks themselves were horrified at concepts of transparency and disclosure and the politicians of the Coalition were doing all they could to kill off the idea.
But a threat by a number of Coalition members to move a private members bill to bring it on forced the Government’s hand. Supported by the ALP, the Greens and other independents, the Government would have lost the vote.
Queensland Senator George Christensen talked about the Government “having to be dragged” into a Royal Commission and if there is a senator capable of dragging people anywhere, it would have to be Christensen.
All the usual suspects defended their institutions. The Coalition had for decades opposed compulsory superannuation and industry superannuation funds because, in their view of the world, only bankers, people just like them and traditionally aligned to their side of politics, should have a monopoly on managing that kind of money. Their hostility to industry super, the not-for-profit model and equal representational boards representing employers and employees in the industry, was venal and borderline psychopathological.
Former Financial Services Minister Kelly O’Dwyer, pictured above, had opposed it and called the faintest suggestion “reckless and ill-conceived” in 2016, opposing it all the way until it was inevitable and then, even after it was announced, unlike many others from her side, not accepting it had been a mistake to delay it so long.
Former PM Turnbull, himself a banker in a former life, after accepting the political reality acknowledged it had been a “political mistake” and it would have been good to start investigating the banks’ wrongdoing much sooner. One of the great understatements of the last 10 years.
And Former Treasurer (and still PM this week) Scott Morrison refused to support it. In 2016 be dismissed calls to have an inquiry a “populist whinge”, and later described those wanting his apology for opposing and delaying it as “political point-scoring”. Not a bad point though eh, Scott.
Former PM John Howard, a vociferous supporter of the banks and opponent of industry super called the idea of a Royal Commission “rank socialism” in encouraging his side to oppose it.
Former Immigration Minister at the time Peter Dutton responded to the announcement of the Royal Commission that it was a chance to scrutinise industry super. He told Ray Hadley (a Sydney radio blowhard) hours after the announcement that the Royal Commission was “regrettable” but it would be a chance to investigate industry super funds “which have union members and whatnot on the board.”
Dutton said “I think people lose a lot of their super through fees and through donations and all sorts of support for unions. So I think it’s a good opportunity in that sense to have a look at the detail and people can put all of that information forward and we can see the recommendations from the commission.”
We all knew prior to the Commission that superannuation funds owned by the banks on average underperform industry super funds by 2% per year over the last 15 or 20 years. Well, all of us but Peter Dutton, but as things were revealed in Canberra last week, he does struggle to get the numbers right.
The Australian Bankers Association said the Royal Commission was “unwarranted” but the popular support for an inquiry created an “unacceptable risk” to the reputation of banks and the financial system. Famously, the ABA said “our banks do not fear scrutiny or accountability”. We don’t believe them. Those who opposed the Royal Commission would have been well aware there was much to hide, but the revelations were astonishing.
We’ve all watched the Royal Commission play out. No bank has survived this unscathed. Multiple witnesses from the big banks and insurance companies confessing to wrongdoing; fees for no services; financial planning fees for people known to be dead; NAB and CBA now at risk of criminal charges over breaches in their superannuation arms; chronic failures to reduce fees with deadlines on the introduction of My Super; conflicts of interest; a failure to have superannuation Trustees independent of the bank that owned them; misleading the regulator, tampering with financial reports and claiming they were independent; a CBA executive agreed CBA would win a “gold medal” for charging customers for financial advice services they didn’t receive, and refunding $118.5 million to customers for this conduct; “hopeless” systems so they couldn’t identify occasions where customers were charged inappropriately for advice; CBA fined $700 million for breaching money-laundering and terrorism laws 53,506 times providing millions of dollars to drug importers; fraudulently setting up thousands of children’s bank accounts to earn bonuses and meet aggressive performance targets, with the CEO trying to trivialise the scandal by saying that the money taken from the kids “was small or loose change”; by ANZ’s figures the bank’s bad financial planning advice had increased by a multiple of 40 from 2008 to 2016 from 60 to 2499 cases; financial planning without consideration of the primary interest of the client; ANZ knew from 2013 to 2015 11% of their Millennium3 advisors and 6% of their financial planning advisors were rated at “high risk” of not providing appropriate advice; and on and on; NAB impersonated customers, forged their signatures as it drew customers’ money without their permission... Bloody hell, it never ends.
But as Adele Ferguson, writing in the Sydney Morning Herald on August 25-26 said, all “while there were few adverse findings made against the industry funds examined during the hearings earlier this month.”
It does beggar belief that anyone would voluntarily choose to pay superannuation into an account managed by the banks. Many employees have no choice in their employment but just for fun, try to Google who the trustees are in the superannuation offerings of the four big banks. You won’t find them.
But trustees and industry funds are publicly identifiable and examinable. Not only that, their returns are so much better. All this evidence compromises the integrity of the historic antagonism of the Coalition to industry funds and their slavish defence of the banks. This must change.
