At a time when the nation’s financial sector might be experiencing a degree of inquiry fatigue, Shadow Treasurer The Hon Chris Bowen MP has made it clear a vote for the Australian Labor Party at the next election is a vote for a Royal Commission into banks and the financial services industry.
Labor says Royal Commission will drive regulatory change
By Mark Eggleton
At a time when the nation’s financial sector might be experiencing a degree of inquiry fatigue, Shadow Treasurer The Hon Chris Bowen MP has made it clear a vote for the Australian Labor Party at the next election is a vote for a Royal Commission into banks and the financial services industry.
In a speech at the Financial Services Council Leaders’ Summit in Sydney and in conversation with FSC CEO Sally Loane, Mr Bowen outlined why the ALP is committed to a royal commission and why its terms of reference need to extend beyond the sector’s bad behaviour.
FSC CEO Sally Loane rejected calls for a Royal Commission into financial services, saying it would be an unnecessary and inefficient use of time and resources.
“Over the last 18 months, more than $300 million has been paid by banks for a range of bad behaviours. We need to ensure the regulatory, policy and cultural settings are in place to ensure these scandals are not repeated,” Mr Bowen said.
Yet while poor behaviour will be addressed, Mr Bowen says a Royal Commission also represents a real opportunity to undertake regulatory reform and lead a "proper, considered and comprehensive examination" of the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.
Furthermore, Mr Bowen reiterated a Royal Commission’s terms of reference will deal with the whole financial sector, including industry super funds.
The ALP’s reasons for an RC push
He said the three reasons for examining the whole system include the nation’s high levels of household debt, the ad hoc approach to recent regulatory changes and the rise of fintech and the challenges it presents for financial regulation.
He is worried the regulatory lines are being blurred between the Reserve Bank, APRA and ASIC and while he remains committed to the twin peaks approach, “a stocktake is warranted.”
For Mr Bowen, a Royal Commission would be a prudent and timely examination of our financial regulation architecture, in a period when the financial services sector is confronting a number of challenges.
20 years on from Wallis Inquiry
Considering it has been 20 years since the Wallis Inquiry and the far-reaching changes it brought to our regulatory architecture including the establishment of APRA and ASIC, Mr Bowen believes it’s time to thoroughly examine all aspects of financial regulation in Australia.
Moreover, the Financial Services Inquiry led by David Murray about two years ago didn’t find the need to make any recommendations for major change, but there has been a lot of disruption since David Murray’s report.
“We will appoint thoroughly credentialed and experienced and respected royal commissioners and we will give their recommendations all the proper weight that they should receive.”
Beyond the Royal Commission providing a serious opportunity to examine the state of financial regulation in Australia, Mr Bowen said a successful overhaul could be a boon to Australia’s financial services industry beyond our shores.
It presents an opportunity “to improve our economic engagement with Asia and ASEAN in particular.”
Reason being is in the next 15 years, four of the five of the world’s largest economies will be in Asia and Indonesia alone will be the world’s fifth largest economy ahead of the UK, Germany, Russia and France.
Mr Bowen says regulatory reform will ensure Australia’s financial services sector is world leading “and will allow me to promote the performance of our funds management and our financial services industry (in the region) from the Treasury portfolio correctly.”
Media Release
This conversation was part of the 2017 FSC Leaders Summit in Sydney on July 25.