After months of talking down the need for a banking royal commission, the government has abruptly announced it will now establish an inquiry into Australia’s banking sector to root out bad practices.
The shift in policy was driven by the major banks themselves. In an open letter to Treasurer Scott Morrison released early Thursday morning (30 November), the banks said a full inquiry was needed to bring “certainty” to the banking industry.
“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,” the statement said.
“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.”
It follows a number of scandals in the industry about poor practices, compliance failures and even underpayments of employee entitlements.
The move is not a good look for the government, given that it has faced accusations of being too close to the big end of town. With the banks suddenly changing their mind on the need for an inquiry, and the government immediately following suit, allegations of bias towards corporate Australia are likely to ramp up.
The latest political poll suggested the government is lagging the Opposition, with Prime Minister Turnbull losing his status as the preferred Prime Minister over Labor’s Bill Shorten.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.