Bankers aren’t going to jail but they will work better, and fairer

Hurting the banks really means hurting ordinary Australians, so it’s not going to be a revolution. Bankers are not going to jail. But they will change for the better, says Terry McCrann.

Banking and financial services will be reformed and made to work better for customers.

It’s not going to be a revolution. Bankers are not going to jail.

The banks will have to do a better job and so also will the regulators — the corporate cop ASIC and the prudential regulator APRA (which is supposed to work to keep both banks and their customers safe).

The object is to make banks work better and, importantly, fairer.

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They won’t be turned into social welfare organs — ordered to hand out free or too-cheap money or free services.

The biggest win customers will get is in the banning of inappropriate or excess charges and advice that is conflicted and ends up hurting them.

But there are also costs.

Potentially the biggest is having borrowers using a broker to arrange a home loan. Hayne wants the customer to have to pay the broker an upfront fee — while now that fee is paid by the bank.

But this is the one recommendation that was not accepted upfront by treasurer Josh Frydenberg.

More broadly, commissioner Kenneth Hayne has resisted the temptation to try to impose some sort of dramatic industry-wide ‘solution’ to the bad behaviours exposed over the last year.

He has charted a wise — and effective — course between holding banks (and regulators) to account for past failures and not seriously damaging the stability of the banking system and its ability to deliver services at reasonable cost to consumers.

Really hurting the banks would only really hurt ordinary Australians — both in terms of getting access to loans and other financial services and in their ability to have confidence in the security of their deposits with banks.

Importantly, Hayne delivered a set of recommendations that any government would have found impossible not to accept — and in full.

Importantly, this flows on to the opposition which in all likelihood is going to be the government which effectively implements what the report has recommended.

The good news is that banking and financial services won’t change much from tomorrow.

The better news is that they will change for the better. That’s better for bank customers. But Not in a zero-sum way.

The customer can win; the bank does not have to lose.