Profit and loss
A commission of inquiry reaches a damning verdict on Australia’s banks
If a healthy banking system is dull, then Australia’s must be sick to the core. A royal commission with a broad remit to investigate abuses by the country’s financial institutions has found many troubling practices.
Hearings revealed that for years banks had hidden fees, charged money for non-existent services and docked charges from the dead.
Financial advisers earned bonuses for channelling clients’ cash towards underperforming funds. Insurance companies flogged junk schemes to the poor or mentally disabled.
In April the country’s biggest asset manager, AMP, sacked its chief executive and chairman after the inquiry heard that it had not only charged customers for advice that was never provided, but had lied to the regulators about it.
On February 4th Kenneth Hayne, the judge who led the inquiry, handed his final report to the government. Heads have rolled: the chairman and chief executive of National Australia Bank, which Mr Hayne singled out for particular criticism, have resigned.
The commissioner has asked regulators to investigate 24 possible breaches of civil or criminal law. Mr Hayne expressed particular disgust at those who gouged fees without providing services.
The report said the Australian Securities and Investments Commission (ASIC), the corporate regulator, should consider the maximum penalties: large fines, or up to ten years in prison for individuals.
Thus Australia, a country widely regarded as having had a “good” financial crisis, with a stable, profitable banking system, may become one of the few places where bankers are jailed for institutional wrongdoing.