Banks, financial institutions may face criminal legal action from banking inquiry before federal poll

Banks and other major financial institutions could face criminal legal action before the federal election in the wake of the banking royal commission.

Major financial institutions including banks are bracing for possible criminal legal action over scandals unearthed at the finance royal commission - and they are not ruling out facing the first of these before the election.

The corporate cop — the Australian Securities and Investments Commission — has a shopping list of more than 20 matters it is looking at in the wealth management area in which criminal offences could have been committed.

ASIC chief James Shipton has tipped a more aggressive approach by the regulator after claims at the commission it was too timid.

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Financial institution insiders talked to by the Herald Sun said they were not ruling out seeing some criminal claims coming before the May 18 poll.

In his February 4 final report commissioner Kenneth Hayne recommended two large institutions to ASIC for possible criminal charges joining another already before ASIC. These were not named.

AMP and National Australia Bank came off particularly badly from revelations about their handling of scandals.

If criminal charges are lodged by ASIC during the campaign it is believed it could set off the battle between parties over getting tough on the already unpopular finance sector. “We haven’t seen legal action yet — but we will,” one bank insider said.

At the same time yesterday, politicians were warned not to go light on the big end of town.

Berrill and Watson principal John Berrill, who worked on cases that prompted the royal commission, told the Herald Sun that the public were so angry they would not forgive parties that let corporate bosses off the hook this election.

“The politicians had better fix the corporate wrongdoing identified in the Royal Commission.

Commissioner Kenneth Hayne and Treasurer Josh Frydenberg with the final report from the Royal Commission into Misconduct in the Banking, Picture: Kym Smith

Otherwise the voters will take to them with baseball bats,” Mr Berrill said.

“It is crucial that in the lead up to the election the plight of the thousands of victims of poor behaviour by banks, insurers and advisers is not forgotten.”

Mr Berrill said there has “already been some back-pedalling” on implementing the recommendations of the Royal Commission around things like mortgage broker reform.

Treasurer Josh Frydenberg said the additional $550 million in the Budget for ASIC and APRA would help stamp out misconduct, including with possible criminal convictions.

“Furthermore and for the first time, the jurisdiction of the Federal Court of Australia will expand to include corporate crime, with the Coalition providing more than $35 million in the 2019-20 Budget to support this expansion.

“The expansion and funding will ensure that those who engage in financial sector criminal misconduct are prosecuted and face the appropriate punishment for their actions in a timely manner.”

Opposition financial services spokeswoman Clare O’Neil said Labor would consider referrals to ASIC “carefully”, but added she wanted to see bankers who steal from Australians punished with prison terms.

“When Australians steal from a bank, they go to jail, but many Australians feel that if a banker steals from them, they get a pay rise and a promotion,” she said.

Meanwhile, it is believed the total compensation that will be paid by banks and others to consumers over the “fee for no service” scandal would climb even higher.

Analysts have already estimated the big four banks plus AMP and IOOF will pay remediation to customers that will exceed $7.4 billion over the scandal which featured at the heart of last year’s royal commission.

NAB a week ago revealed another $749 million of compensation while Westpac last month announced a further $260 million compensation hit. But insiders say more is to come as banks trawl customer files.

The spotlight will turn on the banks this week with ANZ reporting its half year results on Wednesday, NAB the following day and Westpac on May 6.

The bank results expected to show some of the lowest revenue and profit figures since the global financial crisis.

AMP on Thursday also faces a crucial shareholder vote at its annual meeting. If shareholders vote against the company’s corporate pay package it could lead to moves to oust its current chairman David Murray and the rest of the board.

AMP copped a “strike” from shareholders last year and a second one this year under Australian corporate rules would trigger a vote to spill the board.

The Herald Sun can reveal the nation’s biggest super fund Australian Super is expected to vote for AMP’s pay package for bosses. It is a move which could save the current AMP board the embarrassment of a spill motion.

Eyes will then turn to NAB this week amid rumours it could reveal a new chief at its annual meeting. Departing Royal Bank of Scotland boss Ross McEwan is shaping up possible boss at NAB after chief Andrew Thorburn resigned after the commissions scathing assessment of the lender.

McEwan was once in the running for the top job at the Commonwealth but instead ended up running RBS in the UK.

McEwan surprisingly quit that job last week so now people think he is in line for the NAB job. “You could not rule it out,” one banker told the Herald Sun.

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