Peter Costello says ASIC ‘not awake’ on bank misbehaviour

Credit will be tighter and advice more expensive after the bank inquiry, says Peter Costello, who also blames regulators.

Peter Costello says banks have behaved poorly but questions must also be asked of ASIC. Pic: Ned Meldrum

Credit will be harder to get and financial advice will become more expensive as a consequence of the banking royal commission, Peter Costello has warned.

The Future Fund chairman and former treasurer also says there are questions to be answered about why the regulator was not “awake at the wheel” when the bad behaviour revealed this year was going on.

Mr Costello further predicted out-of-cycle rate rises by the big banks as central banks around the world lift their funding costs and said some moderation in the housing market would be a good thing.

He was speaking after the Future Fund revealed it had easily beaten its target by posting a return of 9.3 per cent last financial year.

Mr Costello said the behaviour identified in the royal commission would likely lead to more regulation which would affect the profitability of the banks.

It was already prompting banks to quit the wealth management business and there was a question over who would then own those businesses and what changes they would make.

“Credit will probably get harder because the obligation on banks to assess the creditworthiness of customers will probably increase, so that will have an effect on the more general economy,” Mr Costello said.

“But coming out of all of this will probably be that banks won’t be so profitable, credit will be harder to get and financial advice will be more expensive and consequences that will flow from all of those things.”

Mr Costello said it was clear banks had behaved poorly and those running them “probably haven’t done their jobs”.

But he said there was a question for the regulator.

“Where was ASIC (the Australian Securities and Investments Commission) when all of this was happening?

“I think that is the next step at the royal commission, to actually find out why the regulatory agencies weren’t awake at the wheel.”