Prime Minister Malcolm Turnbull has announced that a Royal Commission into Australia’s financial services sector will go ahead.
At a press conference this morning, the Prime Minister said that ongoing speculation had to end.
“Cabinet has met this morning and has determined the only way we can give all Australians a greater degree of assurance is a Royal Commission into misconduct into the financial services industry,” Malcolm Turnbull said this morning.
“Only the government can ensure that a Royal Commission is created, established with respected and capable commissioners,” he said.
Australia’s major banks had long resisted an inquiry, calling it an unnecessary and costly exercise. However late yesterday, CEOs from the big four banks – Commonwealth, NAB, Westpac and ANZ – wrote to Treasurer Scott Morrison requesting a “properly constituted inquiry”.
In the letter, the banks said that ongoing uncertainty surrounding the sector and dwindling trust towards the institutions warranted Government intervention.
“It is now in the national interest for the political uncertainty to end. It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people. It also risks undermining the critical perception that our banks are unquestionably strong.
A strong, well-regulated and well-governed banking system is in the interests of all Australians and is critical to job creation and fairness. The strong credentials of the banking system ensured Australians were spared the worst of the Global Financial Crisis, and have been fundamental to the ongoing performance of our economy despite global and domestic political turmoil.”
In a media release, the Prime Minister said the Royal Commission would be established to further ensure Australia’s financial system is working efficiently and effectively.
“The Inquiry will consider the conduct of banks, insurers, financial services providers and superannuation funds. It will also consider how well equipped regulators are to identify and address misconduct. It will not inquire into other matters such as financial stability or the resilience of our banks.
This will be a sensible, efficient and focused inquiry into misconduct and practices falling below community standards and expectations. Most Australians are consumers of banking and financial services, and we all have the right to be treated honestly and fairly by banking and financial services providers.”
After consulting with the governor of the Reserve Bank and the chair of APRA, Treasurer Scott Morrison called the Inquiry a “regrettable but necessary course of action.”
At an estimated cost of $75 million, the Royal Commission will run for 12 months, with a final report expected by February 1, 2019.