CANBERRA: An Australian parliamentary inquiry into the nation’s Big Four banks this week is likely to usher in a slew of consumer-friendly changes – steps the lenders hope will stave off the threat of a wide-ranging investigation into their activities. The committee of 10 lawmakers indicated recommendations could include the formation of a customer complaints tribunal, measures to make it easier for consumers to switch banks and an easing of requirements for new banks.
The inquiry is the first time the banks’ CEOs have been summoned in what is set to be regular testimony at least once a year as politicians responded to public anger over a series of scandals and the lenders’ failure to pass on rate cuts to mortgage customers in full. At pains to take a conciliatory stance, the bank chiefs of Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ), Westpac and National Australia Bank all agreed to in principle to the proposals as they were questioned for three hours each.
“In recent years it is clear a trust gap has opened up. We are working hard to improve,” Westpac Chief Executive Brian Hartzer told the committee on Thursday. In other moves aimed at deflecting criticism, NAB Chief Executive Andrew Thorburn said the bank had decided in May to stop donating to political parties while ANZ also told the committee earlier it may change its donations policy. Westpac and CBA do not make cash donations to political parties but do pay to attend political events.
The hearings did not placate Opposition Leader Bill Shorten, who on Thursday said he would continue to call for a Royal Commission to undertake an investigation into bank activities. “If all of these bank CEOs keep saying we stuffed up, we got it wrong, we have caused problems for our customers, haven’t they just made the final argument in favour of a banking Royal Commission?” he told reporters in Melbourne.
A Royal Commission is the most powerful investigative body in Australia, with the power to recommend prosecutions and new legislation. Shorten’s calls for a commission, however, have been opposed by the banks and the government which has said it that it doesn’t plan to change its mind. Dr Rob Nicholls, a lecturer at the University of New South Wales Business School, said the bank executives had clearly come to the committee prepared to make concessions.
“Ironically, I think it is the demands for the Royal Commission that have led to the compromises,” Nicholls told Reuters in a phone interview. The banks, which account for 80 percent of lending in Australia, have been under fire for abuse of market power following a series of scandals involving misleading financial advice, insurance fraud and interest-rate rigging.
