Banking royal commission: criminal cases ‘will take a decade to resolve’

It will take ‘a decade’ for regulators to work through a long list of referrals from the royal commission that include criminal charges.

Commissioner Kenneth Hayne.

It will take a decade for regulators to work through a long list of referrals from the Hayne royal commission that include criminal charges against three institutions for dishonesty, a leading law professor said.

Mr Hayne recommended criminal charges against two institutions that he did not name, and said the corporate regulator was already mulling similar charges against a third, as well as referring 15 named entities back to the sector’s regulators, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority, for further investigation.

These include three of the big four banks — ANZ, Commonwealth and NAB — along with royal commission targets AMP and IOOF. “I expect the majority of them to go to court,” Professor Dimity Kingsford Smith, the director of the University of NSW Centre for Law, Markets and Regulation told The Australian.

“He’s heard a lot of evidence and had some very fine forensic minds working on the matters.

“It’s going to take 10 years to get through them all.”

Mr Hayne said his proposed criminal charges related to the widespread practice within the banking industry of charging fees but providing nothing in return — a scandal likely to cost the sector about $2 billion in compensation.

Mr Hayne said this could be a breach of section 1041G of the Corporations Act, which makes it a crime to “engage in dishonest conduct in relation to a financial product or financial service”.

“On its face, taking money for nothing is dishonest conduct,” Mr Hayne said in his report.

“If the conduct in issue was a contravention of section 1041G, it is that section that best captures and conveys the criminality.”

Professor Kingsford Smith said breaches of 1041G were “endemic across the industry”.

“Fees for no service is the classic instance of sector wide unlawful behaviour, not just bad apples.

“There may well be many entities or people within entities that end up being referred to the regulators for investigation.”

While Mr Hayne did not name his targets, his inquiry took aim at most of the big players, including CBA, NAB and AMP, for charging fees without providing a service.

AMP, which also drew fire during the inquiry for misleading the corporate regulator about its fee for no service scandal, last night confirmed it was subject to an “ongoing” ASIC investigation.

“We have no information on the matters raised by the commissioner in his report,” a spokeswoman said.

Mr Hayne said that in the dishonest cases he had referred to ASIC there was “no doubt that money was taken from clients”.

“Nor is there any basis for doubting that, when taken, the taker did not intend to return it to the client.”

This included both cases where the client lacked a financial adviser who could give them services and when a client had died, as the commission heard happened at AMP, CBA and NAB.

In either case a jury could conclude “beyond reasonable doubt” that the conduct was “dishonest according to the standards of ordinary people and that the conduct was known by the taker to be dishonest,” Mr Hayne said.

He also referred CBA, NAB, Suncorp, ANZ, AMP, IOOF, Allianz, TAL and Youi to regulators for further investigation. He said Allianz should be investigated for the crime of failing to report serious breaches of its licence.