Banking royal commission: how to keep the banks in line

The best hope is that lessons from the royal commission will have such a strong impact they’ll change banks’ mindset for ever.

National Australia Bank CEO Andrew Thorburn arrives at the royal commission. Pic: AAP

Royal commissioner Ken Hayne and inquiry counsel Michael Hodge QC have made it clear their services won’t be available for annual reviews to help keep banks up to the task.

NAB chief Andrew “batteryman” Thorburn was effusive in his praise for the work of the royal commission but added, to chuckles all around, “We can’t have this every year.”

To which Hodge responded: “We all agree on that.”

That explains why Hayne has not rushed to seek extra time to complete his inquiry, which is due to hand in its final report due by February 1.

The thought of extra time hearing about bank misconduct and mistakes and complaining customers is not exactly an appealing prospect for anyone.

Which gets to Hayne’s central point: “What can be done to ensure you continue your changes?”

Thorburn didn’t have the definitive answer to this point - only that the bank would keep trying.

To an outsider the question is particularly pertinent, given the commission is working on case studies presented to it by the banks.

Presumably then the bank knew about the problems but just didn’t do much about them and it has taken the publicity of the commission to get it moving.

This doesn’t exactly fill you full of confidence. Nor does the role of the existing regulators, based on their evidence to date.

More competition would help.

But the best hope is that the lessons learned from the commission process will have such a strong impact on the banks that it will forever change their mindset.

Thorburn confided: “Most transformation comes from pain...”. He stressed he said the word “pain”, not “Hayne.”

The bank’s purpose is to shift focus to what the customers want - services based on the relationships.

Thorburn said this was one change the bank was making. Others included a shift from short to the long term, simplicity and restructuring pay away from the wrong incentives.