Hayne review slaps banks on the wrist

Hayne review slaps banks on the wrist
  • Saying something and doing nothing
  • The recommendations are…
  • Look out for the sacrificial lamb

Good news, bankers!

You may carry on with your evil banking ways.

And you, regulators?

It’s also business as usual.

But this time it’s even better.

Not only were you able to ignore the despicable banking actions of raping and pillaging Aussie customers…

…now you have been charged with ‘following up’ the criminal actions from the Royal Banking Commission.

You know all the powers you had before but didn’t use?

Well, you get to chase them up again.

Oh and Australians, what about you?

Well, I have disappointing news for you.

Nothing is going to change.

Saying something and doing nothing

Well, wasn’t that a dog and pony show?

The Royal Banking Commission took months, included 100 witnesses and some 10,323 submissions.

The banking spectacle dominated the 2018 news cycle.

Banks shares were hammered down from their April 2017 highs.

It cost taxpayers an estimated $75 million to discover our dirty banking deeds.

Yesterday, when the markets closed, the findings from Commissioner Ken Hayne were made public.

The outcome? 76 recommendations that were meant to rattle the banking sector to its core.

Except that won’t happen.

Banks essentially have been given a slap on the wrist. That’s it.

The recommendations are…

Hayne’s findings suggest ending trailing commissions for mortgage brokers on all new loans. And over the next two to three years, Hayne recommends the end of the banks paying brokers. Instead, customers should pay upfront in a ‘fee for service model’.

In the report, Hayne points to 24 cases of criminal misconduct, some of which may be aimed at the banks or individuals. National Australia Bank has copped the brunt of Hayne’s wrath.

However, in a plot twist, Hayne has recommend that all 24 cases of criminal misconduct be followed up by APRA or ASIC for ‘further investigation’.

This in itself is hilarious.

You see, as I explained yesterday, APRA and ASIC are our financial services regulators.

Yet they did absolutely nothing to punish the banks when they behaved badly.

In his interim report, Hayne said that adequate legalisation was already in place for the regulators — just that inadequate inaction was taken or ‘did not meet the seriousness of what had been done’.

Except in this final report, Hayne believes that both APRA and ASIC are up to the task of following up the misconduct this time around.

In spite of their gross negligence holding the big four banks to account, Hayne suggests that both regulators now are responsible for investigating the 24 criminal cases against the $3.6 trillion banking oligarchs of Australia.

Worse still is that Hayne suggests that the overseers get their own overseer.

Nope. I’m not joking.

One of Hayne’s recommendations — to ensure the regulators punish big businesses the way they target smaller ones — is that another regulatory body be established to ensure that APRA and ASIC do their jobs.

This is another layer of bureaucratic mumbo jumbo. Something that, in the long run, will do very little — aside from see more taxpayer dollars spent…

Look out for the sacrificial lamb

The whole report from Hayne appears to be based on recommendations and follow-ups.

Given the regulators have shown a tendency to ignore banking misdeeds, I suspect there will be at least one official sacrifice to satisfy the theatrical government rage.

With the election only a few months away, there will be a sense of urgency from both sides of government to look like they are ‘doing something’.

The biggest issue with the anticlimactic findings in the report is that it isn’t the banking overhaul many expected.

There appears to be an avenue open for people who were sold mortgages they couldn’t afford.

In fact, one article even suggested that banks may be forced to check if borrowers can repay their mortgage debts.

However, that’s really it.

If the lobbyist don’t get their way, and mortgage brokers become a ‘fee for service’ model rather than be paid by banks, it will only lead to greater mortgage debt concentration in the banks. That could lead to about 20,000 mortgage brokers out of work.

 Aside from that, the rest of Australia has very little to take away from the report.

The banking sector doesn’t want reform — and I’ll bet my pay cheque that the government doesn’t want to disrupt the credit machines that prop up Australia’s economic prosperity.

We’ve seen this sort of posturing and pandering before.

The end result of the Haynes report is that banking reform will be reduced to political slogan over the next few months.

The final outcome of the Royal Banking Commission is that it was a $75 million enquiry into the banks’ secrets and toothless regulators.

It has done little to restore people’s faith in the banking sector.

So buckle up, folks. Last year’s royal commission was nothing but entertaining viewing.

But nothing will change.

Give it a year, and it will be like the royal commission never happened.

Banking in Australia is too big to stop.

Until next time,

Shae Russell Signature

Shae Russell,
Editor, The Daily Reckoning Australia