The big four banks sent Australian Treasurer Scott Morrison a letter on Thursday urging him to make a decision on the parliamentary commission of inquiry into the banking and finance sector.
The chairmen and CEOs of the ANZ bank, CBA, NAB and Westpac came together to pressure the Treasurer, saying it’s “imperative” he acts decisively to deliver certainty to Australia’s financial services sector and “put an end to the uncertainty and restore trust, respect and confidence”.
The letter from the banks follows pressure on the government from Labor and some Nationals MPs to establish a royal commission into the nation’s banks.
Earlier this week a second lower house Nationals MP, Queensland Nationals MP Llew O’Brien, said he will cross the floor to provide the numbers necessary to support a private members bill led by Nationals Senator Barry O’Sullivan.
That bill proposes pan inquiry into the banking, insurance and superannuation sectors led by three commissioners — a former judge, a community representative and a financial expert — with a report provided to the parliament.
As the bill already has the support of Queensland Nationals MP George Christensen, the AFR reports it is thought to now have the numbers to pass both Houses.
Labor leader Bill Shorten also flagged that the Opposition would work with O’Sullivan on trying to establish an inquiry.
Just hours after the letter was sent to media outlets, Morrison and Prime Minister Malcolm Turnbull announced that there would not be an inquiry but a royal commission into the banks, revealing Cabinet signed off on the plan on Thursday morning.
This is a major political backflip by the Coalition, which up until recently did not believe the banking inquiry was an issue.
Over the weekend Turnbull said: “A royal commission would simply be an inquiry, take a long time, cost a lot of money and make some recommendations, which would no doubt be to do precisely what we are already doing.”
Today, he said a commission would prevent the banks and the financial services sector “being used as a political football”.
“It’s moving into dangerous territory where some of the proposals being put forward have the potential, seriously, to damage some of our most important institutions,” he said.
“The only way we can give all Australians a greater degree of assurance is a royal commission into misconduct into the financial services industry. Only the government can ensure that a royal commission is created, established with respected and capable commissioners.” More on that here.
Here’s the letter in full.
We are writing to you as the leaders of Australia’s major banks. In light of the latest wave of speculation about a parliamentary commission of inquiry into the banking and finance sector, we believe it is now imperative for the Australian Government to act decisively to deliver certainty to Australia’s financial services sector, our customers and the community.
Our banks have consistently argued the view that further inquiries into the sector, including a Royal Commission, are unwarranted. They are costly and unnecessary distractions at a time when the finance sector faces significant challenges and disruption from technology and growing global macroeconomic uncertainty.
However, it is now in the national interest for the political uncertainty to end. It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people. It also risks undermining the critical perception that our banks are unquestionably strong.
As you know our banks have acknowledged that we have not always got it right, and have made mistakes. Together with the Government and regulators, since 2014 we have been taking action to fix issues, and improve what we do and how we do it. We have collectively appeared before, or taken part in 51 substantial reviews, investigations and inquiries since the global financial crisis, 12 of which are ongoing. We continue to demonstrate our commitment to doing the right thing by our customers and seeking to ensure those genuinely affected by these mistakes are appropriately compensated.
A strong, well-regulated and well-governed banking system is in the interests of all Australians and is critical to job creation and fairness. The strong credentials of the banking system ensured Australians were spared the worst of the Global Financial Crisis, and have been fundamental to the ongoing performance of our economy despite global and domestic political turmoil.
We now ask you and your government to act to ensure a properly constituted inquiry into the financial services sector is established to put an end to the uncertainty and restore trust, respect and confidence.
In our view, a properly constituted inquiry must have several significant characteristics. It should be led by an eminent and respected ex judicial officer. Its terms of reference should be thoughtfully drafted and free of political influence. Its scope should be sufficient to cover the community’s core concerns which include banking, insurance, superannuation and nonADI finance providers. Further to avoid confusion and inconsistency, the inquiry must to the most practical extent replace other ongoing inquiries.
It is vital that the terms of any inquiry consider the many reviews and inquiries that have been conducted into the banking sector in recent years; the significant government and industry-led reforms that have been and will shortly be implemented; the 44 recommendations made in the Financial System Inquiry in 2014; and the broad and positive contribution that banks make to the Australian economy and to millions of customers and shareholders.
It is also important that any inquiry reports back in a timely manner so that we can have certainty about the findings and move forward to implement any recommendations. We will work hard to ensure our contribution to any process helps to further strengthen Australia’s financial services system.
Throughout this, our focus will remain on our customers. We are proud of the work our people do every day to support them. That work continues.
David Gonski, AC ANZ Chairman
Shayne Elliott ANZ Chief Executive Officer
Catherine Livingstone, AO CBA Chairman
Ian Narev CBA Chief Executive Officer
Ken Henry, AC NAB Chairman
Andrew Thorburn NAB Chief Executive Officer
Lindsay Maxsted Westpac Chairman
Brian HartzerWestpac Chief Executive Officer