Sharri Markson: Breaking the banks

SCOTT Morrison’s early opposition to the financial services royal commission leaves him vulnerable to attacks from Labor after days of horror stories of misconduct.

MALCOLM Turnbull tentatively raised with Treasurer Scott Morrison the possibility of holding a royal commission into the banks in November last year.

They were facing a backbench ­revolt led by Nationals MP George Christensen over the issue at a time when the Coalition’s numbers in Parliament were down as a result of the dual citizenship crisis.

Turnbull discussed the possibility of holding a royal commission or commission of inquiry with Morrison and other senior ministers, including Kelly O’Dwyer and Peter Dutton.

The Treasurer was furious that Turnbull was even considering a royal commission, given he had ­personally argued stridently in public against one.

He pointed out he was already a long way down a path of serious ­reforms to financial services sector, the government had already ­ann­ounced tough new penalties for executives engaged in misconduct, and that there is a fine line between transparency and destroying credibility in our financial institutions, which could risk our Triple A credit rating.

Witness Jacqueline McDowall leaves the banking services royal commission on Thursday after recounting her experiences with Westpac.

Morrison was ropeable at the prospect of being hung out to dry again like he had been on the GST.

Soon afterwards, on November 21, a despondent Cabinet discussed its options, and canvassed holding a banking royal commission — a fact I reported on the front page of this newspaper the very next day.

The ministers were faced with two unpalatable options: Announce a royal commission themselves, or face a humiliating defeat in Parliament with rogue backbenchers crossing the floor and end up with a royal commission anyway.

The day my story ran, Turnbull and Morrison vehemently denied they were looking at a banking royal commission on television shows Today and ­Sunrise.

A week later, they backflipped.

If a banking royal commission was inevitable, they figured, the Turnbull government may as well set the terms of reference itself. They wid­ened the inquiry to include financial ­institutions, such as AMP, not just the big four banks.

In effect, it was forced on the Turnbull government by the renegade ­George Christensen.

Five months on, the damning revelations emerging from the royal commission are shaming not only the banks, but are causing immense political pain for the government, too.

Banking executives on the witness stand have come across as cagey and evasive, especially up against the baby-faced yet forensic counsel ­assisting Michael Hodge, who also worked on the Grantham Floods Commission of Inquiry, and the ­intimidating, tough commissioner Kenneth Hayne.

So far, revelations have ­focused on AMP and Common­wealth Bank.

AMP Ceo Craig Meller and chairman Catherine Brenner at an annual meeting.

AMP has been irreparably damaged by revelations from the Australian Securities and Investments Commission (ASIC) that it had been overcharging customers, charging ­clients for advice that was never provided, and lying to the regulator.

Worse, AMP misled ASIC by failing to disclose that on 20 occasions it continued charging fees to clients who no longer even had an adviser.

The commission has heard evidence that AMP’s senior leadership team, CEO Craig Meller, chairman Catherine Brenner and legal counsel Brian Salter, requested Clayton Utz make numerous changes to a so-called independent report.

They also heard that the Commonwealth Bank was charging fees to dead people, on top of overcharging and taking fees for services that were not given.

And no one could fail to be moved by the story of the woman who, with her husband, sought financial advice from Westpac financial planners only to see their savings devastated by bad advice and high fees.

The potent line of political attack from Labor is this: How could the Prime Minister and Treasurer have wanted the scandals covered up?

Labor has lined up to remind voters how their political leaders ­opposed this transparency.

They’re rolling out images of Morrison calling a royal commission “populist whinge”.

Bill Shorten is even demanding Turnbull say sorry to the Australian public:

“Malcolm Turnbull should apologise to Australians for opposing and stopping a royal commission for so long. This is the royal commission that Mr Turnbull didn’t want and tried to stop.

COMMONWEALTH BANK ADVISERS CHARGED DEAD CLIENTS FOR ADVICE

‘A GOLD MEDAL’ FOR CHARGING CUSTOMERS FOR ADVICE THEY NEVER RECEIVED

“He voted against it more than 20 times. The Liberals wanted all of this to stay secret.

“Even when he ­finally relented and allowed it to go ahead, Mr Turnbull called the royal commission ‘regrettable’.”

The banks, through high fees and slow call centres, are already deeply unpopular with the public.

This attack from Labor will resonate. Barnaby Joyce was quick to come  out  yesterday  and claim he was wrong to oppose the royal ­commission.

So concerned is the government about the political pain that today the Treasurer and Kelly O’Dwyer will ­announce new powerful penalties for financial misconduct to try to stem the bleeding.

They will try to drown out the claims they didn’t want a commission with tough new laws.

Mathias Cormann has warned that the royal commission, which is due to release an interim report on September 30, could be extended beyond its initial 12 months, although this would get dangerously close to an election cycle.

It’s worth remembering that if you put a blow torch to virtually any industry, particularly where insiders are compelled to give evidence, there will be horror stories and isolated pockets of misconduct.

Overall, the banking sector is reasonably healthy.

The question is whether Morrison, O’Dwyer, Turnbull and Cormann can ramp up their outrage enough, and back it up with substantial action, that voters will forget the government’s initial opposition.

The rhetoric this week where the Treasurer has threatened jail time is clearly designed to steal Labor’s ­attack lines.

And, perhaps the tables will turn later this year if the industry superannuation funds — the likes of which Shorten himself was formerly a director — come under the royal commission spotlight.