Bank boards also responsible: Scott Morrison

Treasurer Scott Morrison has put company boards on notice that they are ultimately responsible for corporate culture.

Former AMP Ceo Craig Meller and chairman Catherine Brenner. Picture: John Feder.

Treasurer Scott Morrison has refused to apologise for rubbishing the idea of a royal commission into the banks that he now acknowledges has produced evidence of “abhorrent” behaviour in the sector.

Launching a package of tougher penalties for corporate wrongdoing alongside Financial Services Minister Kelly O’Dwyer this morning, Mr Morrison also put company boards on notice that they were ultimately responsible for corporate culture.

“Let’s not forget, it’s not just chief executives here,”Mr Morrison said.

“Boards, at the end of the day, are responsible for these organisations, and there will be a lot of focus on executives, where executives haven’t been able to deliver here,” he said.

“At the end of the day, the boards of these organisations are the custodians, really, of the governance, and I am sure that that will have plenty of attention, as the commission carries on its important work.”

He denied that the government’s decision to reveal this morning its response to a Treasury review of penalties for corporate wrongdoing that was completed in November was a knee jerk reaction to the royal commission’s revelations.

“What we’ve been doing goes to getting the job done,” Mr Morrison said.

He said that apart from calling for the commision, opposition leader Bill Shorten had not “put one suggestion forward how to improve the system”.

Ms O’Dwyer said Mr Shorten was in government during a string of scandals including Storm Financial, Trio and Great Southern.

“We are cleaning up the system that Bill Shorten ignored,” she said.

Mr Morrison said the resignation this morning of AMP boss Craig Meller following revelations the financial group misled the Australian Securities and Investments Commission 20 times “doesn’t surprise me”.

“It’s not just the chief executive level - boards at the end of the day are responsible for these organisations,” he said.

They were “custodians of the governance” of companies, he said.

The royal commission has heard evidence that institutions both creating and selling financial products creates a conflict of interest, prompting calls for the banks to be broken up by divesting their financial planning arms.

Mr Morrison stopped short of endorsing the idea.

“I think you are already seeing some of these institutions make this commercial decision,” he said.

Supporting the government’s tougher penalties, Australian Banking Association CEO Anna Bligh said the royal commission hearings had been “sobering” for the industry and the issues raised “unacceptable”.

“The industry has supported the strengthening of the penalties regime for misconduct since the federal government announced its review 18 months ago, as an outcome of the Financial Services Inquiry,” she said in a statement.

Ms Bligh said before today’s announcement, banks had already put in place rigorous background checks to stop bank staff with a history of misconduct moving from one institution to another.

“Many of the issues raised over the last few days are the subject of investigation with changes already underway in the sector to ensure cases such as these cannot reoccur.

“The industry expects that further changes should and will be made following the final recommendations of the commission.”

Government ‘ran protection racket for banks’

Earlier, Labor frontbencher Anthony Albanese accused the government of running a protection racket for the banks, voting against a royal commission “on more than 20 occasions” before it was finally cleared to run this year.

Mr Albanese said the government refused to consider an inquiry “Even when members of their own back bench were crying out for this Royal Commission.”

“They were describing it as a stunt, as reckless, as something that wouldn’t achieve anything, as just populous nonsense, according to Scott Morrison and Malcolm Turnbull, and, indeed, Kelly O’Dwyer,” he said.

“What we are seeing now is the evidence out there for all to see, and good policy comes from the evidence”.

He said the royal commission had begun to expose the tip of the iceberg of the banking sector’s misconduct.

“What we have heard is senior executives ‘fessing up to what is extraordinary rip offs of ordinary Australians and their savings,” he said.

“We haven’t heard yet from many of the victims of these practices”.

Cabinet Minister Christopher Pyne said the evidence the royal commission has heard already was extremely disturbing but the government will “wait for those recommendations before we act hastily”.

“We are seeing a lot of evidence being presented in the Royal Commission which is very disturbing, and that’s why the Government is taking action to strengthen ASIC’s powers even more than we already have,” he said on the Today Show.

“We have already given ASIC $100 million more money to pursue bad practices and we are changing the laws to give them the power that they need to be able to pursue bad banking practices”.