Banking royal commission: conflicts of interest ‘need elimination’

Nationals senator Barry O’Sullivan said he would have liked to see the break up of the banks from their financial planning arms.

Nationals senator Barry O'Sullivan. Picture: AAP

One of the key government agitat­ors for the banking royal commission, Nationals senator Barry O’Sullivan, said he would have liked royal commissioner Kenneth Hayne to have gone further in his recommendations by forcing the break up of the banks from their financial planning arms.

Senator O’Sullivan applauded Mr Hayne’s report but said it didn’t go far enough in protecting consumers from conflicts of interest from bank-owned financial planners. “The only thing I substantially disagree with is I think the vertical integration needs to dismantled, with respect to financial advice,” he said.

“When that financial institution is owned by one of the ­majors, it would be silly to think they are going to recommend investment from one of their competitor banks. It’s just not going to happen.”

Senator O’Sullivan said he would push for the government’s coming “big stick” divestiture legislation to deal with anti-­competitive legislation in the ­energy sector to be extended to the banks. “The government is looking at these divestment laws in relation to the energy sector and there are quite a number of us saying ‘Look, we will only support this if it is broadly brought in as a principle of commerce, not just for the energy sector but also for Coles and Woolworths, and particularly for the banking and financial ­sectors’,” he said.

Another key driver of the royal commission, Nationals senator John Williams, said he wanted to see legislation passed before the election to impose new civil penalties on trustees and directors for breaches of their responsibilities.

He said with only five sitting days scheduled for the Senate before an election was due to be called, timing would be tight but the change should be doable before parliament was dissolved.

Both Nationals senators ­applauded the commission’s recommendations to help banks deal with distressed agricultural loans, which have been accepted by the government.

They include a new farm debt mediation scheme and a requirement that banks do not charge default interest on agricultural loans when drought has been declared.