The banking royal commission has been receiving extensive coverage lately. To help you appreciate why, let’s get up to scratch…
A Long Time Coming
Since the GFC, Australia’s financial services sector has accumulated a damning rap sheet: shoddy home/car loans, bad financial advice, lying to regulators, document forgery, alleged bribery, the list goes on!
Australia said enough was enough. Last December, the incumbent government was basically pressured into announcing the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
What Does It Involve?
The first of three rounds of public hearings begun on March 13 – March 23; focussing on consumer lending practices. The second round concerns financial advice (16 April – 27 April), and the third, small and medium enterprises (21 May – TBA).
Additionally, the Royal Commission will read through public submissions about misconduct in the financial services industry. As at April 20, they had received 3,822 submissions; the majority related to banking (67%).
The Royal Commission has been given a deadline of 30 September to submit an interim report. Barring any political intervention, the Commission will run into 2019, where a final report is due on 1 February.
Bombshell Upon Bombshell
With the third round still ahead, the commission has been nothing short of eventful. The public is appalled by the volume of shocking behaviour admitted to by Australia’s leading banks and financial planners.
We saw Sydney-based AMP Limited admit to lying to regulatory watchdog ASIC over falsely charging customers fees; prompting the CEO to stand down.
Our biggest bank, the Commonwealth Bank, admitted to charging fees to customers they knew had died, including one who was charged for over a decade.
The remaining three big banks – NAB, Westpac, and ANZ – all admitted to shameful practices, the particulars of which would be far too long to explain!
Australians Hurting In Many Ways
Australia’s trust in the banking and financial services industry is in free fall, as well as the share prices of public companies in the financial sector.
Common mum-and-dad stocks are the big four banks, given their enticing dividend yields and household names. As more bad news gets leaked to the public, all four big banks are seeing multiple billions of dollars wiped off their respective market caps.
Not So Super
Balances of everyday Australians’ super accounts have suffered immensely from this fallout. Given their conservative nature, industry superannuation funds are heavily skewed toward Australia’s most valued publicly-listed companies.
And so, with the big four banks situated in the five most valued ASX companies (by market cap) – not to mention the deceitful AMP Limited being in the ASX20 – the retirement kitty of ~15 million innocent Australians would be hurting.