Banking royal commission recommendations flounder, two years on

Billions of dollars were stolen. Dead customers were charged. Worthless products were sold to millions.

Two years ago, the final report of the banking royal commission exposed a culture of rapacious greed, of profits and shareholders being put before customers and the law.

But there has been slow progress to fix the scandals exposed.

The aftermath of the 2018 probe killed the careers of the chief executives and chairs of several of Australia’s top banks: AMP, NAB and Westpac. Court battles against IOOF, NAB, the Commonwealth Bank, Allianz and more have been won, lost or are ongoing.

But, by some counts, barely one-third of Commissioner Kenneth Hayne’s 76 recommendations have passed through to become law. Some have been abandoned. And the very first recommendation — to leave existing responsible lending laws unchanged — is set to be shredded, along with those laws.

“The average person out there thinks everything’s been solved. ‘Oh, we had a royal commission. Oh, they charged dead people’. There was all this ‘oohing’ and ‘aahing’,” said consumer advocate Lena Anderson.

“Now (people) think, ‘Well, the Government’s looked after it’.”

Ms Anderson lost her home after an unauthorised $22,000 withdrawal made by her bank escalated into a legal battle costing over a million dollars. She fought Westpac in court, all the way to the High Court, representing herself and losing each time.

Now a representative for others in dispute with their lenders, the 60-year-old said the bad behaviour towards customers that propelled the royal commission into being is back.

“In my case, and in a lot of other cases in the community that I’m involved in, they’re actually behaving worse because they haven’t been scrutinised by the commission,” she said.

The reality isn’t that simple, for consumers or the banks.

Hayne pain

The year-long Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry began in early 2018, after years of high-profile scandals involving our biggest banks created an unstoppable momentum for an independent inquiry.

Despite running through topics as broad as consumer finance (mortgages, credit cards and car loans), superannuation and insurance in just two weeks of hearings each, it exposed criminal behaviour, jaw-dropping scandals and billions of dollars of rorts.

The 76 recommendations from Commissioner Hayne were tabled by the Government two years ago and began being passed into law.

Some of the most contentious changes were scheduled to be made law at the end of 2020 — something consumer and legal groups agreed was an ambitious timetable, given the amount of legislation required.

But two separate tranches of laws were delayed by six months each. The need for the industry to recover from the pressing impact of the COVID pandemic was the stated reason when the delay was announced in May.

It later came to light that there had been a concerted lobbying effort from the banking industry — including commission witnesses who oversaw scandals that saw bank managers jailed for fraud — to delay the implementation of the recommendations.

‘Insult’ to witnesses

Cat Newton is a senior policy officer at the Consumer Action Law Centre, which helped many of the witnesses who appeared at the royal commission. She’s deflated by the delays.

“What we don’t want to see is another two years go by and all of the lessons of the royal commission are lost,” she said.