Bligh backs crackdown on banks

ABA chief Anna Bligh is urging the next government to introduce an industry reform bill within 100 days.

ABA CEO Anna Bligh

Australian Banking Association chief Anna Bligh is urging whoever forms government after the federal election to introduce an industry reform bill within 100 days, as she admitted litigation of the “right cases” against banks would help rebuild public trust.

Speaking at a conference in Sydney, Ms Bligh said policymakers and banks needed to act quickly on areas including ending grandfathered commissions, creating a nationally consistent farm debt mediation scheme and changing ongoing advice fees.

“This will make for a busy second half in 2019 but the circumstances warrant a sense of urgency,” she said.

Her comments follow the Hayne royal commission making 76 landmark recommendations across the banking and financial services industry. Commissioner Kenneth Hayne called for grandfathered commissions — which were paid on investment and other accounts before reforms in 2013 — be repealed “as soon as is reasonably practicable”.

In its initial royal commission response the federal government said it planned to scrap the grandfathering of the conflicted commissions from January 2021.

Ms Bligh was, however, less clear on the time frame for other changes and banking industry reforms related to the royal commission, which she said reflected increased complexity.

The ABA was committed to implementing its new banking code of practice on July 1, although some clauses would have later operational dates if association members needed “system changes”.

“Without doubt a number of recommended legislative reforms, such as changes to mortgage broker remuneration, enforceability of codes and extending BEAR [the Banking Executive and Accountability Regime] to product life cycle will require extensive consultation and consideration,” she said.

Mr Bligh said the explosive revelations of the royal commission provided an opportunity for important change at banks.

“The challenge is to become ‘unquestionably good’,” she said, using a play on words for the banking regulator’s capital requirements that large lenders be “unquestionably strong”.

“‘Unquestionably good’ means going above and beyond the expectations of customers.”

In response to tense debate about the corporate regulator’s fiercer enforcement policy, and referrals by the royal commission to it and the banking regulator, Ms Bligh agreed the public wanted to see more accountability and court action if warranted.

“The public want to see, not just in this sector but in every sector, they want to know if people do the wrong thing they will face the consequences of it,” she said.

“There is no exception in banking. If people have done the wrong thing, if they have broken the law, then the appropriate legal action will follow.

“The public does want to know that some of the things revealed in the royal commission will have consequences.”