Greens join banks debate with sound suggestion

The Greens have jumped into the bank debate with a good call: put someone in charge of policing this troubled industry.

Greens Member for Melbourne Adam Bandt, Greens leader Senator Richard Di Natale and Greens Senator Peter Whish-Wilson at a press conference outside of the Commonwealth Law Courts in Melbourne. Picture: AAP

As the prospect of criminal proceedings suddenly loom over super fund managers at the Royal Commission, the Greens have jumped into the debate with a sound suggestion: put someone in charge of policing this troubled industry.

Typically, the Greens then followed this idea up with a string of increasingly loopy comments about locking up bank managers and breaking up the banks. But for a fleeting moment the Greens were on target — if we know anything already from these scorching early sessions devoted to the flaws at NAB’s super division, it’s that our vital and vast superannuation sector is simply not well regulated.

There is no single agency in charge. Rather three agencies — ASIC, APRA and the ATO — tip-toe through the sector and the end result is what some have branded as ‘regulatory capture.’

The specific suggestion to bring in the Australian Competition and Consumer Commission as the new regulator for super savers has merit. It should certainly be examined because until there is one regulatory force with total oversight in super we are guaranteed more scandals such as charging dead people financial advice fees.

We need protection here — super is universal. It is legally required of every single worker in the land. It can’t be left to drift between regulators.

But consumer protection should not mean moves to cripple an industry which — for all its faults — did survive the GFC in very good condition compared to overseas counterparts … think Northern Rock, HBOS or Lehman Brothers.

Greens leader Richard Di Natale. Picture: Aaron Francis

Moreover, the banks make up about 35 per cent of the entire Australian share market: it is in this context that we have to take the ideas of the Greens with extreme caution.

The Green banking manifesto as delivered on a footpath outside the Royal Commission by leader Richard Di Natale would literally disallow banks as we know them; a financial service firm could only perform one of four services — deposits and lending, asset management (including super), writing insurance or investment banking … It’s a laborious, over-engineered idea that will go nowhere.

What the banking system — and specifically the superannuation divisions of the major banks — need is exactly what they are getting, a fulsome and ferocious examination by a Royal Commission.

If there are criminal cases to be taken against the bankers identified by the Royal Commission then let the law take its course. If there is compensation to be paid out to customers then get it rolling, sooner rather than later.

And then when the final report of the Commission is delivered let’s hope the government of the day has the conviction to act on it. The lobbying of banks against reforms is expert and effective. Just look at the difficulty in getting through the Future of Financial Service Reforms which we now know were not nearly strong enough to protect the mandated lifetime savings of Australians who put them in the bank.