A year after the banking royal commission, what’s changed?

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January 31 2020
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A year after Kenneth Hayne handed down the findings from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, has anything changed?

The Australian Banking Association said regulations have been tightened, top bankers have lost their jobs and billions have been paid out in fines to the bank.

At the release of the final report last year, the industry committed to learning the lessons, fixing the problems and making things right.

CEO of the Australian Banking Association Anna Bligh said that while much progress had been made to fix the problems identified by the royal commission, there was still a long way to go.

“One year on from the delivery of his final report, a great deal of work has been completed to fulfil this commitment,” she said.

Fixing the culture

The royal commission highlighted a culture of greed, which the industry body suggests is slowly being turned around.

The report found changing the way staff are paid, paying back customers and a new banking code were required to fix the issues found during the commission.

“To make things right, banks have this year alone set aside $5.8 billion on refunding customers or related remediation costs,” Mr Bligh noted.

“We haven’t stopped there, we’ve overhauled the way we pay staff by abolishing sales targets to ensure we always, at all times, put the customer first.”

Other changes include:

Launching a new Banking Code of Practice with over 200 new or improved customer rights, with additional changes now approved by the regulator at the recommendation of the Commissioner
Abolishing sales-based incentives for frontline staff
Assigning more than 2,000 staff working to ensure customers get back the money they are owed
$5.8 billion allocated to customer refunds and related remediation programs
Better care of vulnerable people through new rules for debt collection services, new guidelines to improve access for customers with disability and new Code requirements to take extra care with customers experiencing vulnerability

Tougher rules

The royal commission showed new regulations were needed to help protect the vulnerable.

The Commonwealth Treasury previously suggested they will act on the 54 recommendations through an implementation roadmap.

The government has previously stated 90 per cent of its commitment will have been implemented or have legislation before Parliament by mid-2020.

The Australian Banking Association noted:

1,400 senior executives are now accountable under the Government’s Banking Executive Accountability Regime (BEAR). Maximum penalties for breaches under BEAR range from $10 million for small banks to $210 million for large banks
Higher financial penalties and longer prison sentences for criminal behaviour
New powers for ASIC to investigate, conduct searches and ban individuals from the industry

“Banks have a new Code of Practice which has real teeth, with independent monitoring and enforcement and will be strengthened even further this year,” Ms Bligh said.

Back to basics

Finally, the banking sector committed to becoming simpler better banks, with the banking association highlighting the banks:

Are simplifying businesses to ensure a strong focus on core banking
Have standardised basic bank accounts, with no account keeping or overdrawn fees and no minimum deposits for customers with government concession cards

“The industry knows there is still much work to be done to earn back the trust of the Australian people and will continue to remain focused on this task,” Ms Bligh concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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