Greens announce policy ‘to break up the banks’

The Greens have moved to capitalise on royal commission anti-bank sentiment, announcing a policy to “break up the banks’’.

Citing a “shocking degree of rot” in the financial system, the Greens have moved to capitalise on royal commission anti-bank sentiment, announcing a policy to “break up the banks” to “protect customers and improve stability”.

Following emergence of another “fee for no service” scandal, this time with National Australia Bank rather than AMP, Greens leader Richard Di Natale said his party wanted “banks to become banks again”.

“Our banks should be working for us, not operating in this toxic culture that encourages and rewards bad results for customers through complex vertical integrations and the cross-selling of inappropriate and risky financial products, particularly in the form of financial advice, life ­insurance and superannuation. This policy will make sure that happens,” ­Senator Di Natale said.

The Greens policy would allow financial services firms to perform only one of four different functions: taking deposits and lending, managing assets and superannuation, writing insurance, or ­engaging in complex and ­sophisticated financial products — broadly, ‘‘investment banking’’.

Greens senator Peter Whish-Wilson, who previously worked in financial services, said banks needed to be broken up “so they were no longer too big to regulate”.

“The Greens led the charge to establish a royal commission into the banking sector and we are the party with a real, simple solution to the abuses it has uncovered: stop fiddling around the edges and take real steps to break up the big banks,” he said.

“Overwhelmingly, financial complexity has been of more benefit to the finance industry than it has been to consumers or society.”

Former ASIC chief economist Alex Erskine said the Greens policy could “help limit the risks to Australia in the global crises that inevitably lie ahead”.

“Failures in the existing regulatory architectures are more visible as the royal commission proceeds,” he said.

The Greens policy would also shift powers to monitor consumer protection from the corporate and banking regulators, ASIC and APRA, to the competition regulator, the ACCC. “ASIC has not been up to the task, prosecuting only one financial services licence holder in the last decade,” the Greens said.

The royal commission isn’t expected to deliver recommendations until next year. The 2014 Murray inquiry into financial services and a Productivity Commission inquiry stopped short of recommending any sort of break-up of financial institutions.