'It's been a good journey. Now deliver on the destination.'

The final public hearing of the royal commission has ended, and it's time for us to wrap up our coverage.

Over the past two weeks we saw the CEOs of six of the nation's largest financial institutions - CBA, Westpac, Macquarie, NAB, ANZ and AMP -  having to publicly justify their companies' actions, and the chairs of the two regulators, ASIC and APRA, explain their inaction.

Looking back at the hearings, it's a mixed scorecard for the banking bosses and regulators who have fronted the Kenneth Hayne commission - with some of them eager to be accommodating, some appearing remorseful (mistakes, I've made a few...), others showing a bit more reticence.

And then there was NAB chairman Ken Henry, whose testy responses lit up the twittersphere.

It's been draining at times for those who followed the detailed questioning, as this photo suggests: 

Listener fatigue setting in: Counsel assisting Michael Hodge on the final day of hearings. Credit: Internet

Yet observers are unanimous in their assessment of the two senior counsels assisting the commission, Rowena Orr and Michael Hodge, who never missed a beat taking the finance industry to account over these past two weeks of public hearings - and in the previous six rounds. 

We'd second that. 

And we are over an out folks.

Here is Commissioner Kenneth Hayne’s final comments from the hearings.

"Thank you, Ms Orr. I, of course, have a further and more formal opportunity in my final report to acknowledge and thank those who have worked so hard to bring us to this point in the work of the Commission, but it's right that I should say something publicly and say it now."

Commissioner Kenneth Hayne: "We will adjourn."Credit: Internet

"I am, of course, especially grateful to you, Ms Orr and all of the Counsel Assisting, Mr Hodge, Mr Dinelli, Ms Dias, Mr Costello, Ms Slider, Mr Hosking, Ms Zeleznikow... your work has been and dare I say will continue to be of immense help. 

Mr Hayne goes on to acknowledge the work of the Australian Government Solicitor's team and "the intensity of work that has been required of those acting for the entities whose conduct has been the subject of examination" and recognise that, " much more often than not, those acting for the entities and agencies concerned have sought to cooperate with the Commission and with solicitors assisting in seeking to deal with the requirements that the Commission has made."

He thanks the people behind the scenes such as the  document system providers, the transcript of proceedings suppliers and Helen Lubke, the  stenographer. "Her skill remains for me a cause of continuing wonder, her calm attention to her tasks is a continuing cause of admiration, but I rather suspect that this passage of the transcript will read inaudible on tape," the Commissioner quipped.

"Last, may I say something to those who ordinarily sit in the back row of the hearing room, and to those in the media room. This has been a public inquiry. The proceedings have been open to the public and they've been streamed. They've been the subject of reports and comment in all forms of the media. And so they should have been.

"The Commission has sought to do what it can to assist the media in performance of their job but we've done that by making information available generally to the public.

"The Commission has not sought to influence how the media has reported. We've not backgrounded, we've not provided the media or anyone with any information about what witnesses are to be called or subjects covered except by posting what we have on the website. We've not commented on what has occurred in the course of evidence. It has been for the media and for the media alone to decide what will be the subjects of their reports, and what, if any, comments they may choose to make about what the Commission has done. And that, again, is as it should be.

"But it is also right that I recognise the role that the media has played in this being a public inquiry by reporting on the work of the Commission."

With that, he closed the hearing with the usual words: "We will adjourn."

Only this time, adjournement is indefinitely, the transcript reads.

Senior counsel assisting the inquiry, Rowena Orr, QC, has just delivered her short closing address.

'This round of hearings was different to the first six rounds," she said. "Our focus was not on identifying further instances of misconduct, but on understanding why misconduct occurred and what can be done to prevent it in future."

"We anticipate that the matters raised over the past two weeks will play a role in informing the recommendations that you make in your final report."

Senior counsel assisting Rowena Orr as she wraps up the final public hearing of the banking royal commission.Credit: Internet

She then has run through some of the numbers.

Here they are: 68 days, 134 witnesses, 400 witness statements, and more than 6,500 exhibits.

Orr thanked her fellow barristers and the solicitors and the staff of the commission. But her biggest shout out is for the consumers who gave evidence.

“I would particularly like to thank this last group of witnesses, the consumers who agreed to come and give evidence in the commission's public hearings.

"Many of them travelled long distances and gave evidence about their private financial affairs in a very public forum. I know that they did not always find that easy, but their willingness to give evidence about their experiences has greatly assisted the work of the commission, and I am grateful to them.”

Ending his time in the witness box, Mr Byres was asked about MySuper investment strategies, and some criticism of how funds use the terms “growth” or “defensive” assets.

Mr Hodge takes Mr Byres to a speech from APRA member Helen Rowell in 2015, when she identified some of these issues, and asks Mr Hodge what’s been done about it since.

Mr Byres refers to an internal report from 2016, which said: “It is apparent that caution needs to be exercised when comparing MySuper products with similar objectives and asset allocations and the underlying differences need to be understood.”

Mr Hodge asks, whether this doesn't suggest there’s a problem with the information members are being given about their funds and the risks they are taking?

Mr Byres answers by saying it’s very hard to explain the amount of risk being taken to the general public.

Might APRA need to better inform super fund members about risks they are taking with different investment strategies?

Mr Byres says APRA could try.

"I don't have any further questions for this witness, Mr Commissioner," says Mr Hodge. 

Thus ends the questioning of the final witness in the final round of public hearings.

We’re still on fees for no service and APRA’s views on the scandal which has swept through the entire industry.

Here’s a key exchange between counsel assisting Michael Hodge, QC and APRA chairman Wayne Byers on the issue.

Mr Hodge asks whether APRA has considered whether a lack of ethics inside the banks have led to banks charging customers for services they knew they were not receiving. Mr Byers: "So I - my understanding - and I don't pretend to have the depth of the understanding that many people at APRA have is that - so we've looked at cases, it has been inattention rather than any other cause, but I wouldn't rule out other options." Mr Hodge: "Has it occurred to you that at least, or one or more of these entities there might be a financial risk posed by the extent of remediation that they will need to make for fees for no service?" Mr Byers: "The parent entities, you mean? …Well, there certainly is going to be an extensive cost associated with remediation, yes." Mr Hodge: "Sufficient to at least factor into APRAs consideration of the financial risk to that company?" Mr Byers: "As this issue unfolds, yes, the amounts are material, but just so that I'm not misinterpreted, they're not going to threaten the financial soundness of the entities." Mr Hodge: "Have you considered, then, whether when you reflect on the way that APRA has stepped back from fees for no service, whether that is a failing to actually analyse and properly evaluate this industry-wide problem?" Mr Byers: "No. I don't think that's the case, because I think, actually, what we've been trying to do, while ASIC is pursuing this specific issue, is continue to focus on strengthening governance, strengthening risk management, pushing trustees to give more attention to what are the learnings from these exercises, and how do we avoid any sort of repeat into the future."

National Australia Bank’s superannuation trustee Nulis outed itself at the royal commission as having a massive fees for no service issue. The bank first reported the matter to APRA in 2014 as an IT issue that led to fees going into a group account. Or, as it was phrased by NAB at the time: “When the [IT] administrator was reviewing an internal office holding account and discovered there are a significant number of accrued client adviser service fees that had been directed into the account.” Thank gosh for IT departments, hey? Now Mr Hodge and Mr Byers are going through the issue:
 Mr Hodge: "I am interested in whether you would expect APRA, on being notified of an issue that had been going on for seven years, and where it was said that there were no continuous controls from a risk perspective over the end-to-end process, whether that would be something that now would trigger APRA to investigate further?" Mr Byers: "Unfortunately, these are all too common in financial institutions. So I think the supervisor - I mean, would certainly follow up with the - with the institution concerned to find out more details about the issue. But I'm just - I'm just wary of your word "investigate", in the sense of formal investigations under the Act are one thing. Making inquiries are another thing. We would make further inquiries, yes." Mr Hodge: "What did APRA do in this case?" Mr Byers: "So I think they would have discussed the issue with the organisation with MLC. Satisfied themselves that the issue was going to be remedied and focused on what's the process of rectification." Mr Hodge then asks: "And by that point in time then, by the end of 2015, do you think, on reflection, that it was appropriate that APRA had not begun to itself bear down on the fees for no service issue, even just at NULIS?" Mr Byers: "Not necessarily, because I think - I suspect the subsequent breaches were being triggered by ASIC's work that was announced earlier in the year and ASIC's investigation or - across a range of entities. So - so I think - and there would - would have been by - certainly by the end of '15 APRA/ASIC engagement on the breadth and scale of their - I think it's called their wealth management project that was looking at this issue, how they were going about it. "So I think we were very much leaving it to ASIC to pursue these issues and not seek to duplicate."    

After going through the many and varied failings of the banking regulator, counsel assisting Michael Hodge, QC, has a simple question for APRA boss Wayne Byers.

Does the regulator do an effective job?

And Mr Byers admits APRA could have been doing a better job.

It’s quite the turnaround for the regulator in a 12-month period. It now appears to accept that misconduct such as fees for no service, which is expected to lead to customer refunds across the sector of well over $1 billion, could lead to stability issues for the entities it regulates.

Here’s Mr Hodge’s question, and Mr Byers’ explanation.

Mr Hodge: "Does it tell you.. anything at all about the effectiveness of the job that APRA do?"

Mr Byers: "Yes. We've - I mean, I've thought about this - and I think there's a broader lesson from fees for no service, from some of the issues that we didn't go deep enough on and subsequently had to be revealed by the panel and the Commonwealth Bank, in the work that we've done on mortgages, that we have - and this is simplifying, but in all those cases, I think there's a sense that we have looked at robustness of frameworks, we've looked at policy documents, we've looked at procedures, and we've relied on audit and compliance functions to do the detailed testing, both internal and external.

"And - and conceptually, that if you have a good set of frameworks and policies and you - your audit and compliance function are doing their job to make sure that exceptions to those are being picked up, then actually things should broadly work as intended.

"But - so my general lesson, which applies to fees for no service but I think also applies to some of those other issues I have talked about, is we have to think more about how do we get deeper, potentially doing more transaction testing or other things, or asking other people to do it on our behalf that would help us more readily identify these issues earlier."

We’re now delving into APRA’s views of the industry-wide issue of customers being charged fees for services they have not received.

Michael Hodge raises that APRA has now received notice of fees for no service issues across more than 10 RSE (registrable superannuation entities) licensees?

Mr Byers responds: "I don't know the answer to that but it wouldn't surprise me if that was right."

Mr Hodge: "Do you have a view now as to whether fees for no service is a systemic issue within the RSE licensees that you regulate?"

Mr Byers: "Well, I think the - the evidence that's already been produced through the ASIC reports indicate it's a - it's a widespread and significant problem, yes."

Mr Hodge: "Do you have any view as to what the extent of the problem tells you about the adequacy of APRAs supervision of RSE licensees?"

Mr Byers: "It - it says that there are limits to supervision, I think, and that we are not down looking at transactions. We don't audit accounts. To some extent, we are dependent on institutions bringing issues to our attention. When we're talking about those sorts of matters of detail."

Mr Hodge: "What do you think it says about the culture of an organisation - or a financial services entity that it would have significant instances of fees being charged for no service?"

Mr Byers: "Clearly, an insufficient attention to detail, clearly insufficient attention to compliance."

Mr Hodge: "Do you know that the remediation for fees for no service has taken a very long time for some entities?"

Mr Byers: "Yes."

Mr Hodge: "Do you have a view about what that tells you about the culture of those organisations?"

Mr Byers: "Well, I think it tells you that they have, at the heart of it, been slow to identify the issues. Possibly not been sufficiently alert to the potential for small issues to become broader systemic issues. It - one of the reasons it's taking so long is because of a problem with basic record keeping. So I think I'm coming back to these issues of inattention to - to detail, paying attention to compliance."

We’ve just gone through the Australian National Audit Office’s independent performance audit in relation to APRA and superannuation entities.

APRA has held the stance that it ought to regulate stability and prudential requirements of superannuation funds, but not conduct.

The Australian Securities and Investments commission does not believe it has the powers to supervise conduct in the superannuation sector.

So which regulator, if any, regulates conduct in the super system has been a key question for the commission.

Here’s what part of the ANAO’s report said.

“In recent years, similar superannuation entities have received varying levels of supervision and higher risk entities have not consistently been subject to more intense supervision…Further, many of the activities reviewed by the ANAO were late and not recorded in the issues and document management systems and APRA has limited external reporting of its supervision of the superannuation industry. ..

"APRA does not have a quality assurance framework. It does not undertake independent reviews of supervisors' work such as financial and qualitative analysis of interactions with entities. ..

"There is limited oversight by APRAs executive of the implementation of supervision activities and APRA can better specify its key performance indicators to measure the timeliness, quality and implementation of superannuation activities.”

Mr Byers says APRA supported the recommendations from the review - including that it establish a review program on its effectiveness. He says that review is currently underway.

We’ve just been hearing about the issues that APRA has had in enforcing the law. Its chairman Wayne Byers says it is because APRA lost some of its powers more than a decade ago.

Up until 2007, the banking regulator could issue banning orders against representatives from banks, but it was stripped of that tool, meaning it had to go to court if it wanted to take action against someone.

Here’s Mr Byers discussing the issue with counsel assisting Michael Hodge, QC.

Mr Hodge: "The power that you used to have for a relatively brief period of time, I think, perhaps two or three years was to be able to administratively disqualify a person. Is that right?"

Mr Byers: "I think we had it longer than that…I think we had it essentially for - it was there - I'm happy to be corrected but my recollection is we had it for a longer period of time than that. But around 2007 - '06, '07. It was changed so that we couldn't do it administratively."

Mr Hodge: "You had to go to court?"

Mr Byers: "We had to apply to the Federal Court."

Mr Hodge: "And then you stopped doing it, that is, you didn't apply to the court?"

Mr Byers: "I'm not sure - I don't think we've applied, no."

Mr Hodge: "And the issue when you had been administratively disqualifying some people was that then they would apply for a review of your decision to the AAT [Administrative Appeals Tribunal] and the AAT would set aside your decision?"

Mr Byers: "Yes. There were a number of those decisions that were set aside, including directors of HIH Insurance, which were set aside, yes."

Mr Hodge: "And your point, I think if I'm understanding it, is a relatively narrow one, which is to say when it used to be the case that we could administer and disqualify somebody we obviously didn't do it quite as well as we might have because we had …?"

Mr Byers: "No, because we were - we were subject to some criticism about the way we had run a number of those cases."