Inquiry refers scandal-hit Australian banks to watchdogs
A major inquiry into scandals in Australia's banking and financial services firms has referred more than 20 cases to regulators for possible prosecution, and called for substantial changes in the sector.
In the findings of its year-long investigation, the Royal Commission called for swathes of rules to be revisited, and for banks to be more heavily regulated or monitored to prevent future misconduct.
"Saying sorry and promising not to do it again has not prevented recurrence," said the inquiry's commissioner, former High Court judge Kenneth Hayne.
"The financial services industry is too important to the economy of the nation to allow what has happened in the past to continue or to happen again."
Among the 76 key recommendations was the banning of particularly egregious sales practices in the pension and insurance markets, and structural changes in the mortgage broking sector.
The big banks were sharply criticized, with National Australia Bank's chair Ken Henry and chief executive Andrew Thorburn singled out for being unwilling to acknowledge their organization's mistakes.
But Hayne stopped short of publicly recommending criminal charges, preferring to leave punishment to regulators -- which he said themselves had fallen down on the job and were in need of review.
The report -- while extensive -- is likely to disappoint some observers who had called for the heads of individual senior executives who allowed or perpetuated the repeated misconduct and breaches.
Treasurer Josh Frydenberg, whose ruling conservative party had opposed the creation of the commission, called it "scathing".
"From today, the banking sector must change and change forever," he said, announcing that the government would act on Hayne's recommendations.
"Our principal focus is on restoring trust in our financial system and delivering better consumer outcomes."
Australian banks issued an acknowledgment of wrongdoing ahead of the report's release, admitting to failing customers and vowing to "reset" the industry.
"Banks know they have failed their customers and not lived up to the high standards Australians rightly expect of the industry," Australian Banking Association chief executive Anna Bligh said in a statement Monday.
"We do know this an opportunity to reset the industry and to make things better for our customers."
The report had been seen as an inflection point for the economically vital sector, but analysts said the commission was calling for the tweaking of existing laws rather than the introduction of new ones.
Banks have already started to address some of the issues raised, such as spinning off their financial advisory arms from their main activities to avoid conflicts of interest.
Commissioner Hayne had been praised for his no-nonsense approach to the hearings.
He made clear his independence from Canberra when he uttered a curt "no" when asked by a journalist to shake hands with Frydenberg when the report was being handed over.