LIVE Banking and finance royal commission findings

It's been a day of reckoning for Australia's big banks as we close our live coverage of Commissioner Hayne's blunt attack on the dishonesty of the sector's profit-driven culture.

Matt Golding's view.Credit: Illustration

"Charging for doing what you do not do is dishonest. No-one needs legal advice to tell them that. The root cause for what happened was greed; the greed of both licensees and advisers."

"Whether the conduct is said to have been moved by ‘greed’, ‘avarice’, or ‘the pursuit of profit’, it is conduct that ignored the most basic standards of honesty," Justice Hayne wrote.

The corporate regulator has come in for heavy criticism from Justice Hayne who describes a weak watchdog that is too close to the banking sector and reluctant to act on misbehaviour.

ASIC, headed by James Shipton, rarely went to court to seek punishment for misconduct.Credit: Eamon Gallagher

“Entities appear to have treated the law as applying only when and if they chose to obey it,” Commissioner Hayne said.

The banks are squarely in the sights of both the Coalition and Labor in the lead-up to the next election.

"It would be surprising if the royal commission made recommendations that we were not able to support." Credit: Mick Tsikas

Alleging banks and financial service providers had trashed basic standards of honesty and put greed before people, Mr Frydenberg said the report "shined a very bright light on the poor behaviour of our financial sector".

The government has spent months apologising for its near two-year opposition to the royal commission, while Labor rolled out attack ads on Friday, telling voters Prime Minister Scott Morrison blocked the inquiry 26 times before he was forced to retreat in the wake of an internal revolt.

Labor effectively gave Commissioner Hayne carte blanche to rewrite the financial regulation rulebook, vowing on Friday to implement whatever he recommends in his final report if they win government.

"Given what we have seen of the interim report, given the stories that have been told by victims of the financial sector misconduct, we think it's very important to act swiftly and decisively to clean up this industry," Acting Opposition Leader Tanya Plibersek said.

Chief executives of some of the country’s biggest banks have vowed that their institutions will change in response to the failings revealed by the Hayne royal commission.

 

Commonwealth Bank chief executive Matt Comyn said the lending giant was committed to learning from the failings being highlighted in a “confronting” report from Commissioner Hayne.

“The Royal Commission’s Interim Report released today is confronting and rightly critical of our industry and our bank,” Mr Comyn said in a statement.

“The Commission has highlighted the need for significant changes, particularly to systems, processes and culture. I am committed to making sure that we learn from the failures detailed in this report to fix what went wrong and put things right for our customers.”

In Westpac’s response, chief executive Brian Hartzer apologised to customers who had been wronged, and acknowledged the bank has more work to do.
Mr Hartzer said the bank was carefully reviewing the report, and it was focused on learning from past mistakes.

“The Royal Commission has identified many examples of misconduct across the industry. I apologise to any customers who have been impacted by mistakes that we have made”.

Mr Hartzer said Westpac had made changes such as improving how it paid staff, and scrapping some commissions, but added “we know we still have more work to do.”

Australian Banking Association CEO Anna Bligh said Australia's banks accept "full responsibilty" for the failures.

ANZ chief executive officer Shayne Elliott said it was a "critical moment" for the industry.

“This is a critical moment for the industry, our bank and our people to continue the urgent work required to fix the significant failures highlighted by the Commission. We ­accept responsibility and we are determined to improve.”

The royal commission has slammed the targeting of indigenous Australians.

Evidence on the prevalence of selling funeral insurance to young Aboriginal and Torres Strait Islander people pointed to "predatory" behaviour, Commissioner Hayne said.

While Commissioner Hayne was excoriating the banks for their greed, traders on the ASX were patting them on the back, boosting their share prices.

At market close, CBA was up 1.9 per cent, ANZ up 1.4 per cent, NAB rose a respectable 1.76 per cent and Westpac closed at 1.16 per cent higher.

Ros Waller, a 73-year-old pensioner, who lost her farm after missing a few payments, says royal commissioner Kenneth Hayne "has hit the nail right on the head".

 

 

Ros Waller missed a couple of payments due to prolonged drought and lost her farm.Credit: Peter Hardin, Northern Daily Leader

"The old tradition was that the banks were your friend, but not anymore. Now it's all about greed and the basic standards of honesty have gone awry," she says.

Hayne, in his interim report on the banking royal commission handed down on Friday, has highlighted the shortcomings of the regulators, "who have not done anything", says Waller, who spent 34 years as a school teacher and farmer, raising sheep and cattle as well as breeding horses.

 

Commissioner Hayne says AMP may have deliberately lied to the corporate watchdog in its reporting of a “fees-for-no-service” scandal.

AMP's Anthony 'Jack' Regan outside the Commonwealth Law Courts.Credit: Joe Castro

In some of the most explosive testimony given to the commission, AMP executive Anthony "Jack" Regan in April admitted it may have made as many as 20 false and misleading statements to the Australian Securities and Investments Commission. Commissioner Hayne said he had no reason to doubt this evidence.

“Through AMP’s dealings with ASIC regarding both the extent and nature of its fee for no service reporting, AMP adopted an attitude toward the regulator that appears to me, and at the time appeared to ASIC, not to be forthright and honest,” Hayne writes.

“Indeed, the statements made could be seen as a deliberate attempt to mislead.”

He also said AMP may have misled ASIC when it claimed that a Clayton Utz report into the affair was “external and independent,” pointing out that 22 drafts of the report were provided to AMP.

“In particular, having regard to the number and nature of the changes made to drafts of the report, it may be open to conclude that AMP knew that the report was not an independent report,” he said. “ Conduct of that kind, if established, might be misconduct.”

Hayne says that as the matter is already being considered by ASIC, he doesn’t need to consider referring the matter to the corporate cop.

NAB CEO Andrew Thorburn had this to say today:

"Where we have made mistakes .. we will own them and fix them."Credit: Josh Robenstone

“I have had the opportunity to read the summary of the Royal Commission interim report and will review the report in more detail over the weekend. I would like to thank the Commissioner for his thoroughness and diligence.

“For us at NAB, where we have made mistakes or done the wrong thing, we will own them and fix them.

“It is difficult to face the statement of ‘profits before people’, but this is exactly what we need to confront. Banking was built on putting people first and earning the trust of customers. We must return to these principles once again, rather than continuing to be short term managers.”

And ASIC chair James Shipton was quick to note the report’s serious and important observations of ASIC’s role as a regulator.

"ASIC will carefully consider these observations, as well as the broader findings in the report, and will respond fully in its submission by 26 October 2018.

ASIC will continue to assist the Royal Commission and to work with the Government, the Parliament and other regulators to build a stronger legislative, enforcement and regulatory framework with tougher penalties," he said.

For a man delivering such disturbing news to the Australian people, Treasurer Josh Frydenberg looked quite relaxed on Friday afternoon.

Maybe it was all the footy in the air.

The main take-outs from his press conference was that ASIC had been too willing to negotiate and not keen enough to litigate against banks behaving badly, the regulator can probably have more money, but it will have to ask first.

Oh, and in news that will surprise nobody, if Royal Commissioner Kenneth Hayne wants to extend his inquiry, he too only has to say the word.

The Treasurer said Commissioner Hayne’s interim report laid bare a culture among the nation’s financial institutions that put “profit before people”.

“Greed has been the motive and short term profits have been pursued at the expense of basic standards of honesty,” Mr Frydenberg said.

Banks and other institutions were operating with relative impunity, looks like.

“This interim report also makes clear that while behaviour was poor, misconduct when revealed ‘either went unpunished or the consequences did not meet the seriousness of what has been done’”, The Treasurer declared.

“ASIC, the Commissioner points out, rarely went to court to seek public denunciation of and punishment for misconduct.”

“Significantly, the Commissioner observes that infringement notices imposed penalties that were immaterial for the large banks.”

In Commissioner Hayne’s words:

“Too often, entities have been treated in ways that would allow them to think that they, not ASIC, not the Parliament, not the courts will decide when and how the law will be obeyed or the consequences of the breach remedied.”

Josh said that bit twice, in case anybody wasn’t paying attention.

On the all-important question of the timing of the release of the Royal Commission's interim report on a public holiday in Melbourne and on the eve of the AFL AND NRL grannies?

You taking out the trash or what, Josh?

"If we had sat on this report, because it was handed to the Governor-General today, you would have said 'what are you hiding?" the Treasurer assures us.

...and yes, there was a question on why the Turnbull government fought tooth-and-nail against this Royal Commission. Some bloke, can't remember who, even called the idea a "populist stunt".

"We are the ones who got the Royal Commission up and running, we're the ones who added superannuation and insurance to the terms-of-reference and we're the ones who are implementing important reforms," Mr Frydenberg said.

Guess that's sorted, then.