Opinion: Government can’t deny its knowledge of bad banking culture shown in royal inquiry

EVIDENCE before the Haynes royal commission shows that something is rotten in the banking world, and to suggest the Government didn’t know is a joke, writes Dennis Atkins.

LAST year the AMP board met on a number of occasions to review a document drawn up by law firm Clayton Utz.

This report was commissioned because the financial regulator, the Australian Securities and Investments Commission, had demanded AMP conduct an “independent review” of its operations which were regarded as being too vertically integrated between financial advice and product service.

However, damning evidence to the Haynes banking royal commission this week exposed this conduct by the AMP board as a sham. The Clayton Utz review was anything but independent.

The AMP board met on numerous occasions and offered up as many as 25 amendments to the report with the most senior executives signing off on these changes.

Counsel assisting the royal commission Michael Hodge QC questioned why the board would be approving changes to “an independent report”.

AMP group executive Jack Regan said this was because it was being accepted by the board. Hodge suggested that the independent report was subsequently used as evidence presented by AMP to ASIC.

“Do you feel any discomfort at having met with ASIC and said to them, ‘this is an independent report’ in light of what you’ve now seen?” Hodge asked. “There is a level of discomfort, yes,” replied Regan.

This evidence emerged against the background of an email from Clayton Utz to AMP chairman Catherine Brenner saying this report would be completely independent. The royal commission heard not only was the Clayton Utz report not completely independent, the AMP board sought to hide from ASIC clues about the communication with the review team to amend the final document. Yesterday, AMP chief executive Craig Meller paid the price and resigned after which Brenner was contrite.

“AMP apologises unreservedly for the misconduct and failures in regulatory disclosures in our advice business,” said Brenner. “The Board is determined that we will meet these challenges head on, accelerating changes in both culture and performance at AMP.”

The revelations of AMP’s behaviour – along with equally shocking disclosures about the Commonwealth Bank – are clear examples of why this royal commission was not just needed but long overdue.

AMP Ceo Craig Meller – pictured with chairman Catherine Brenner in Sydney last year – has resigned over a not-so independent review into the bank’s operations. Picture: John Feder/The Australian

The big banks and other financial houses were giving customers inappropriate advice without proper disclosure, while others were charged fees not only long after they were obliged to but in some cases after people had died.

The politicians who fought tooth and nail against the royal commission were trying to pretend they were right then even if they acknowledge the revelations this week show the need for stronger powers for ASIC and bigger fines for wrongdoing.

Treasurer Scott Morrison said there was nothing new heard from the Hayne inquiry – a laughable suggestion – while Financial Services Minister Kelly O’Dwyer had the front to criticise Labor for proposing a probe which was “too narrow”.

If anything Labor has been vindicated completely – although it was the Greens who led the way on calls for a banking and financial services royal commission – and can expect to continue to enjoy political support for its resolute stand. Labor plans to hammer home the narrative that the Coalition was too close to the big end of town – especially the banks with their multi-billion dollar profits – to bite the bullet and link this to the Government’s enthusiasm for generous tax cuts for the country’s biggest companies.

Not only does this give Labor an easy attack plan, it also makes it that much harder for the Government to convince those final few Senate crossbenchers to get behind those tax cuts – especially when senators such as Derryn Hinch are holding out because of the benefit going to banks.

To suggest the Government didn’t know something was rotten in the banking world is a joke. Everyone knew for years with expose after expose by leading investigative journalists such as The Sydney Morning Herald’s Adele Ferguson who has been campaigning for a widespread inquiry into the banking and financial advice industries. Ferguson even won a Walkley Award for her efforts but this was apparently not enough to make Coalition leaders open their eyes to the bleeding obvious.

Dennis Atkins is The Courier-Mail’s national affairs editor